The Hindu Business Line : Jindal Stainless plans to enter CRGO segment

JINDAL Stainless Ltd (JSL) plans to take up manufacture of cold-rolled grain-oriented (CRGO) silicon steel in India. Pohang Iron and Steel Company Ltd (Posco) too would be looking at this segment once their proposed plant in Orissa gets operational.

As of now no Indian steel maker produces CRGO grade of steel and 100 per cent of the country's requirement is imported.

CRGO steel is a primary raw material for making transformers and accounts for about 40 per cent of the manufacturing cost. The country's current demand is around 1.2 lakh tonnes of CRGO steel a year.With the Ministry of Power setting a target of 1,00,000 MW capacity addition by 2012, the demand for transformers will increase manifold as transport and distribution needs to match the capacity addition.

Demand up: "The demand for CRGO steel has gone up during the last year. We had already entered the high value specialty steel sector seven years ago with a small 3,000-tonne annual capacity of precision strips used for making surgical instruments and shaving blades. It is just one step below the CRGO steel. We currently produce 12,000 tonnes of precision steel and would increase it to 30,000 tonnes annually by March 2007," the Director - Finance of Jindal Stainless, Mr Arvind Parakh, told Business Line.

For JSL, moving on to downstream value-added products is easier as it is the largest stainless steel producer in the country. "While it may involve huge investments for a new entrant, for our company the additional investments would be around Rs 30-40 crore. But the prices are rewarding and returns are high. We are already increasing our cold-rolled capacity from 1.5 lakh tonnes to 2.5 lakh tonnes annually," Mr Parakh said.

Posco's chief representative in India, Mr S.M. Doh, told Business Line, "CRGO is a very high-end specialty steel. The company currently produces 1.2 lakh tonnes of CRGO and is increasing it to 1.4 lakh tonnes. We could be looking at manufacturing CRGO in India once our proposed plant in India becomes operational."

Global need: According to the Indian Transformer Manufacturers Association's (ITMA) estimates, the global demand for CRGO is approximately 17 lakh tonnes annually. Of this, China needs 45 per cent, India's requirement is around 7 per cent and for the rest of the world it is around 48 per cent. The global supply demand gap is around 2.1 lakh tonnes.

Simultaneously, India's demand is going up by around 12 per cent annually (15 per cent growth in distribution transformer and 7.5 per cent in power transformer industry), according to projections of the 10th and 11th Five Year Plans, which makes India an attractive market for this specialty grade steel.

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