The biggest challenge the steel industry faces today is setting up of Greenfield Steel facilities. The expansion of the steel capacity in the country through the Brownfield route is almost exhausted. Any further expansion is possible only through setting of Greenfield route.

Vikram Amin, Executive Director, Business and Strategy, Essar Steel Ltd shares his views with Sandeep Sharma about his company, upcoming projects, indian steel industry, national mining policy and role of steel in the infrastructure development of our country. Edited Excerpts…

Could you brief us about your company, mission and objectives?

We are currently a 14 mtpa company and aim to be a 20-25 mtpa metals and mining company. Over the last decade, Essar Steel has grown through a mix of green field & Brownfield projects, strategic global acquisitions and partnerships capturing new markets and discovering new raw material sources. Our long term objective is to further burgeon our position in all 3 key stages-minerals & pellets, steelmaking and marketing, of the value chain

What kind of production capacity are you targeting in the short and long run?

Our current 14 mtpa global steelmaking capacity encompasses the 10 mtpa steel complex at Hazira and 4 mtpa at Algoma, Canada. The Hazira steel making capacity is being expanded from current level of 4.6 mtpa to 10 mtpa. The India expansion will be complete within FY12. In the long run, we aim to be a 20-25 mtpa metals and mining company.

Could you tell us about your presence in various geographies and the ones targeted to increase the pace of growth?

Our steelmaking facilities are in Hazira, India and Canada and Downstream facilities in Pune, India and Indonesia. Minerals and Pellet facilities are based in Chhattisgarh, Vizag (AP) & Orissa in India and Minnesota in USA. We have a steel processing and distribution network of 7 service centres across India, covering all major consumption centres and three abroad at UAE, Indonesia and the UK. Apart from this, we have a pan India network of over 600 retail outlets.

In what way have you ensured the raw material for your manufacturing units?

We have long term contracts to ensure raw material security and also actively looking at expanding this further to support our growing operations. We have invested in 12 mtpa capacity, each for iron ore beneficiation and pelletization, in Orissa, taking our total capacity to 20 mtpa each. Besides this, the Essar Steel business globally, has 2 billion tonnes iron ore reserve at Minnesota and 188 million tonnes coal reserve at Trinity Coal, USA.

What’s your commitment to your buyers at large and how do you plan to reach out to them via steel hyper marts?

Our current distribution channel is a testimony to our commitment to our customers. We have invested in India’s largest network of steel processing capacity of 4 mtpa, spread across the country and cater to the JIT requirements of the auto, white goods and the general engineering sectors. Our network of over 600 retail outlets, all over India, has helped make steel products available to semi-urban and rural areas.

How is the current year so far in terms of sales and revenue generated by Essar Steel?

Our sales have grown 45% in Q1 FY 2012 over same period last year. YTD (April-August) sales for FY 2012 have also recorded a growth of over 40% compared to same period FY 2011.

What’s your take on the Indian Steel Industry at large and the challenges being faced?

The biggest challenge the steel industry faces today is setting up of Greenfield Steel facilities. The expansion of the steel capacity in the country through the Brownfield route is almost exhausted. Any further expansion is possible only through setting of Greenfield route. The major challenges faced by the industry in setting of Greenfield facilities are • Raw material linkages • Land acquisition and Relief & Rehabilitation (RR) polices • Environment & Forest Clearance • Financing & high cost of debt

Where do you see the role of Steel in the overall Infrastructure development of our country?

Infrastructure inadequacies have been identified as the significant constraint in realizing the development potential of the country. Steel is extremely critical for development of the critical infrastructure and as such has a significant role in the development of the economy. Moreover, the per-capita steel consumption of India, currently at 52 kg, is low when compared to world average of 203 kg and China’s average of 427 kg. This indicates the immense potential of steel in Infrastructure creation in India considering the fact that every 1 kg of increase in per-capita consumption of steel, shall entail an incremental steel consumption growth of 1.2 million tons at current population levels.