Essar steel gets going in Rs37,500-cr low-cost plan
Essar Steel on Wednesday showcased its Rs37,500-crore ambition to double capacity to 10 million tonnes per annum as the steel maker bets on low-cost manufacture. The Hazira facility hogs 95% of the total investment.business Updated: Jan 04, 2012 21:58 IST
Essar Steel on Wednesday showcased its Rs37,500-crore ambition to double capacity to 10 million tonnes per annum as the steel maker bets on low-cost manufacture. The Hazira facility hogs 95% of the total investment.
The company said the Hazira facility would be one of the most cost-efficient manufacturing units in the world. At its full capacity, it would be the world’s fourth-largest single-location flat steel complex. Its current operational capacity is 6 MMTP.
“Essar Steel will be in the bottom 25% of the global cost curve,” said Shashi Ruia, chairman, Essar Group.
The industry standard for steel-making is $ 1 billion for the production of a million tonne and Essar Steel incurred a cost of $750 per tonne. The company has managed to create this asset at a significantly low capital cost, with costs being lower by as much as 50% than other steelmakers in some cases, the company said in a statement.
Essar steel currently has a debt of around Rs20,000 crore on its books and an equity of around Rs13,000 crore. When asked about plans for an initial public offering (IPO), Ruia said for two years the company would only concentrate on consolidation and no plans have been charted out about an IPO.
The company expects to generate Rs34,000 crore turnover by the next fiscal year at 85% production capacity (of 10 MMTP).