The Hindu Business Line : Aditya Birla Group rules out foray into steel making

THE Aditya Birla Group has ruled out plans to get into steel making. The conglomerate will focus on remaining a "cost-effective, raw materials supplier" to the steel industry, Mr Ravi Kastia, Group Executive President and Business Head of the Aditya Birla Group, said while addressing the Steel Metallics India 2005 seminar here.

Mr Kastia said the Aditya Birla Group's strategy for the metallics business pertains to beneficiation (process of upgrading ore), pelletisation (preparation of pellets out of solid wastes), business diversification into coal, manganese and beach minerals and infrastructure development. "That is the policy of the group," he said.

He said that the production and demand for iron ore, pig iron and sponge iron would go up substantially in the years ahead. India has already emerged as the largest producer of sponge iron in the world.

Abundant availability of coal and sponge iron-grade iron ore; increase in the domestic demand for steel; and less availability of melting scrap in India and metallurgical coke are among the factors that would fuel the growth of India's sponge iron sector.

Mr Kastia said the domestic demand for iron ore is expected to grow by nine per cent a year till 2012 and thereafter, by five per cent till 2020. Export demand is expected to grow by five per cent a year till 2012 and thereafter, by two per cent till 2020.

However, the growth prospects of the metallics industry would improve if problems faced by the industry are effectively addressed.

The need of the hour is to move away from the legacy of a controlled regime and put in place a simple, regulatory framework.

Focus on infrastructure creation and investment in technology would facilitate domestic and foreign direct investment in the metallics sector.

Mr Kastia said that while the outlook for the Indian metallics sector is bullish based on significant capacity additions in steel, the China factor would be "crucial in terms of input costs."

The availability and pricing of natural gas would continue to create pressure on Indian players. As such, it would auger well for the Indian metallics industry to understand and learn from the sourcing strategies of big players in the global metallics industry, he said.

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