The Hindu Business Line : Visa Steel to focus on auto parts industry needs

VISA Steel Ltd, which is setting up a 1.5-million-tonnes-per-annum capacity fully-integrated steel and stainless steel project at the Kalinganagar Industrial Complex of Jajpur district in Orissa at a total estimated cost of Rs 2,500 crore, has firmed up plans to focus on the requirements of the auto components industry.

The first phase of the project, of 0.5-mtpa capacity, would, thus, concentrate on the manufacture of special steel and stainless steel for the auto components industry.

Mr Vishal Agarwal, Managing Director of Visa Steel, told Business Line that while the first phase was expected to be ready by end-2007, the project in its entirety would be operational by 2010. The investment for the first phase has been pegged at Rs 1,146 crore.

Mr Agarwal, quoting Metal Bulletin data, said that out of the total global crude steel production in 2004, mild steel accounted for approximately 91 per cent by volume and 80 per cent by value. In the same year, special steel and stainless steel production accounted for 9 per cent by volume and 20 per cent by value.

According to the data obtained recently from the Society of India Automobile Manufacturers, the size of the global auto components industry has been pegged at $1.2 trillion, which is currently mostly located in higher-cost countries. India is emerging as a global outsourcing hub for auto components.

The industry size in India is expected to go up from $8.7 billion now to $40 billion by 2015, thereby recording a compounded annual growth rate (CAGR) of 16 per cent per annum. Already, export of auto components from India has witnessed a CAGR of 19 per cent per annum over the last six years. In fact, it has been estimated that the export would grow from $1.4 billion currently to $20 billion by 2015 at a CAGR of 30 per cent per annum.

"We are aware of the growth that the Indian auto components industry is likely to witness in the years ahead. We want to position ourselves as a reliable supplier of steel to auto components' manufacturers. The realisations therein will also be higher," Mr Agarwal said.