Essar Steel in $6 bn play, plans global listing

After announcing giant investments in oil and power, the Essar group, promoted by the Ruias, is scaling up its steel business, reports Indulal PM.

After announcing giant investments in oil and power, the Essar group, promoted by the Ruias, is scaling up its steel business. The group is investing over $6 billion (around Rs 24,000 crore) to expand its steel making capacity.

HT Image

Essar Steel Holdings, the holding company for the steel business, will make the investments over five years. Early last month, the group had delisted Essar Steel after buying back floating stock.

The expansion is a prelude to international listing of Essar’s steel business, according to analysts. "An international listing is expected and the group may invite a financial or strategic partner in its global steel venture," said a Mumbai-based analyst with Goldman Sachs. “Money for the expansion will come from internal accruals and debt. Group ventures like Algoma Steel will generate revenue for the expansion,” said a source close to the situation. The group acquired Canadian steel maker Algoma Steel in April 2007.

The expansion will bump up capacity from 8.5 million tonnes to 25 million tonnes by 2012-13, mainly through brownfield and greenfield projects in Asia and the US. When contacted, an Essar spokesperson declined to comment.

Essar Steel has plants in India, Indonesia and Canada. The company is planning to set up another 4 million tonne plant at Hazira in Gujarat.

The company is planning to increase the capacity of its cold rolling facility in the UAE and is setting up a 15 million tonne mill in Chhattisgarh.