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Essar Steel has bagged a ₹100-crore order to make 7,000 cylindrical petrol tanks for the upcoming 4,000 petrol pumps of Essar Oil.
The first major order for cylindrical tanks will open a new chapter for Essar Steel in the fabrication business as it renews focus on providing application solutions for different structures rather than just selling virgin steel.
The fuel tanks, which will have life span of 20-30 years, are being manufactured at the company’s service centres at Hazira, Pune, Chennai and Bahadurgarh (National Capital Region).
Ravi Singh, Chief Executive Officer, Essar Hypermart, said the order has given a further fillip to the fabrication business and the company is already delivering 12 tanks a week.
“We expect the steel fabrication business to contribute ₹1,000 crore next fiscal consuming one lakh tonne of specialised steel against revenue of ₹150 crore to be registered by end of this fiscal,” he said in an interaction with BusinessLine .
The company has an order book of 30,000 tonnes as of now.
It expects the demand for cylindrical structures to touch about $150 million as it has wide applications as silos for storing grains and in processing edible oil.
Besides petrol tanks, the company also has the capability to build storage tanks for auto gas, if the public sector oil marketing companies are looking to add CNG stations, he said.
The consumption of steel in India is lagging behind its global counterparts due to lack of quality fabrication facilities, said Singh.
The steel fabrication industry consumes about 3.5 million tonnes of steel per annum accounting for annual business of about ₹30,000 crore.
The steel fabrication industry is equally divided between organised and unorganised sectors.
With the imminent roll out of GST, Singh said it will be an advantage for organised sector as companies bagging large orders would rely on organised players for the sake of GST compliance rather than giving it local fabricators.
This apart, he said space constrains at the construction sites and lack of quality inputs lead to shoddy work by unorganised small players in the fabrication industry.
The Real Estate Regulatory Bill provision of stiff penalty on builders for delaying projects will also drive steel fabrication within the factory rather than doing it onsite, said Singh.
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