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Steel Authority of India is at advanced level of talks with 2—3 Japanese and Korean firms to produce value-added CRGO (cold-rolled grain oriented) and CRNO (cold rolled non-grain oriented) steel, having a total of over $2.5 billion market, entirely met through imports now.
The maharatna company would like to have a technological partner for the production of the two varieties. However, it is also open to the options of entering into a joint venture agreement with the prospective partner to produce the two, Mr C.S. Verma, Chairman, SAIL, told PTI.
No Indian steel maker has the technology to produce CRGO steel, which is mainly used in power sector and CRNO, which finds application in the making of large dia pipes for oil and gas sectors, now.
Production of these value-added varieties would enable SAIL to increase its margin and help the consumers get them at a cheaper rate since they would no longer have to rely on imports to manufacture transformers and others within India.
Mr Verma said that the current domestic market size for CRGO products would be $1.5-2 billion and the future growth is linked with the spurt in the power sector.
Similarly, CRNO's rate of growth relies on the expansion of the oil and gas sector. Domestic CRNO market is currently pegged at less than $1 billion.
Profitability
However, it is not just SAIL which is scouting for such partners for producing these kind of value-added products, many other domestic players are also looking for forging similar kind of tie-ups for making CRGO and CRNO steel, Mr Verma said.
“If you look at the bottomline of Korean and Japanese firms, their profitability is higher than their Indian peers though they neither have coking coal nor iron ore deposits,” Mr Verma said
“On the other hand, all Indian firms have access to iron ore, still Indian firms profitability is lower than Japanese and Korean firms. It's because, value-added products are made very less in India compared to them,” he said.
SAIL produces a clutch of value-added products and is in the processing of bringing out “many” such products. Out of its total 12.5 million tonnes production, the state-run firm produced 4.36 million tonnes of value-added steel.
Mr Verma said SAIL targets to produce over 50 per cent of the total production as value-added steel by 2012-13 as its capacity goes up to 24.6 million tonnes. The share is further likely to go up to around 60 per cent as the company reaches to 60 million tonne capacity by 2020.
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