The Hindu Business Line : Essar Steel plans more service centres at auto hubs

New Delhi, Aug. 19 Essar Steel, subsidiary of Essar Global, is currently augmenting its steel service centre capacity to two million tonnes from 1.2 million tonnes at its Hazira plant in Gujarat.

The company is also setting up three steel service centres at the auto clusters in Chennai, Pune and the National Capital Region (NCR) to support its growing presence in automobile and appliance sectors.

“Once completed, the company would have the largest service centre capabilities in the country and approximately half of the revenues would be generated through these centres,” a company source told Business Line.

The official, however, could not specify the amount expected to be generated. “Since it is driven by the market it is difficult to predict the exact revenues that would be generated and, also, the cost varies from customer to customer,” the source said.

The Hazira service centre is already operational, while the Chennai centre is expected to become operational by the third quarter of the current fiscal. The Pune and NCR centres will become operational by the end of the financial year.

The company is investing about Rs 200 crore in the project which would be raised through a mix of debt and internal accruals.

“Each service centre would add 2.5 lakh tonnes per annum capacity to Essar Steel, making it the most downstream integrated company with a self-owned supply chain. The move is also seen as a logical extension of the ‘Go Retail’ buzzword of the company and the desire to be as close to the end-consumers as possible,” the source added.

The service centres would have the capability to slit coils to narrow widths, cut them to the desired blank size, process cold-rolled and hot-rolled products, and provide steel in sheet sizes smaller than a regular full-size paper, he said.

Imported equipment

“The company is importing the processing equipment and the lines have been designed to handle cold-rolled, hot-rolled and galvanised steel for the target segments of automobile and appliances. The equipment is also designed to meet the most stringent requirements of slit edge, burr, length tolerance, tabletop flatness and surface inspection,” the source said.

The processing capability is being backed by ERP (enterprise resource planning) implementation of SAL and i2.