Brazil major Gerdau Steel plans ₹1,000-crore investment in Andhra Pradesh plant

Brazilian steel major Gerdau Steel plans to invest up to ₹1,000 crore in adding capacity in its existing plant in Andhra Pradesh.

Gerdau Steel expects to add another two lakh tonne capacity in the next couple of years.

“We have started looking at plans to expand product portfolio and further process debottlenecking. Over the next couple of years, the capacity can be debottlenecked and another two lakh tonnes per year can be added totalling five lakh tonnes per year,” Sridhar Krishnamoorthy, Managing Director, Gerdau Steel India, told BusinessLine .

He said the total investment for de-bottlenecking and also for its product enhancement is estimated at ₹1,000 crore.

He pointed out plants like theirs which produces special steel, runs at about 85 per cent capacity so that any increase in order at a short notice can be accommodated.

Krishnamoorthy said Indian operations was performing well and has started making profits from March this year after three years. The steel maker forayed into India in 2007-08 as a joint venture partner with Kalyani Steel.

The company’s products are used to make camshafts, crankshafts and gears. Krishnamoorthy said for sometime now, the prices for their products have dropped.

For high-end steel which is used for critical applications, the prices have dropped by about 5 per cent and in the low-end, it has dropped 20 per cent.

The products are priced between ₹40,000 per tonne and ₹90,000 per tonne and Gerdau plans to move towards the higher priced bracket by offering improved products and bag more customers who need high-end steel.

Gerdau Steel has a three-lakh-capacity steel plant in Tadipatri and it is the largest investment so far from Brazilian company in India.

Globally, the company has a total of 20 million tonne capacity, including nine mt in its plants in Brazil. It has presence in 14 countries and has about 60 plants globally.

“Our business is heavily reliant on OEMs. We go through a process of audits and trials before we bill the business. In the normal course of things, we are doing better than before,” Krishnamoorthy said.

The contracts with clients are renewed on a monthly basis. This is because raw materials are sourced through e-auctions which are held every month.

He said the passenger vehicle industry in the country is growing steadily at about 5-6 per cent. The company is trying to make inroads into the Japanese auto market.

He revealed that initially the company planned to buy an iron ore mine but because of smaller size of the current operations, it decided to shelve it for sometime.

It now sources iron ore from mines near Hospet.

COMMENT NOW