Essar Group Positions to Become Major Global Steel Producer

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). With the Indian government's continuous emphasis on infrastructure development, it is estimated that the consumption of steel will continue to increase within the next three to four years to meet the growing demand from the construction sector, a fact, not lost on Essar Group. The Essar Group (Bombay:841822521.BO) (Mumbai, India) is positioning itself as a worldwide major steel producer, with multi-million dollar investments worldwide to meet the needs of local and international clients, which include Caterpillar, JCB, Hyundai, General Motors, and Swaraj Mazda Limited. To implement this plan, Essar Group, through its subsidiary Essar Steel (NSE:ESRG.NS), has adopted a three-point program: increasing production volumes, rising operating margins, and reducing finance costs.

To increase production volume, Essar Steel is embarking on several projects, which include debottlenecking, productivity improvements, technology upgrades, brownfield expansion in India, and joint venture greenfield projects in Qatar and Iran in the Middle East. On the domestic front, Essar steel is expanding its hot rolled steel coil plant with the addition of a 1.5-million-ton-per-year mill at the Hazira complex and intends to construct greenfield steel mills in Paradip and Duburi.

Overseas, Essar group, through Essar Global, has signed a memorandum of understanding with Qatar Steel Company (Qasco) to build a 4-million-ton-per-year integrated steel plant, which will cost an estimated $1.25 billion. The project will be implemented in two phases: the first, an HBI plant is expected to come on line by the first half of 2008; the second, a flat rolled steel products plant. In Iran, Essar Group is venturing with another Indian company Tata Iron & Steel Company (NSE:TISC.NS)(Mumbai, India). The joint venture partners plan to spend over $1.8 billion on a steel manufacturing complex, which they expect to be commissioned by late 2007. Essar Construction will carry out the engineering, procurement, and construction, and act as project manager for the Iran and Qatar Projects.

Essar is among the lowest 25% of low-cost producers worldwide, and its aim is to graduate to the lowest 5%. The Essar Group is one of India's largest Corporations, with investments in the manufacturing and service sectors, steel, power, shipping, constructions, oil and gas, and telecom, through it subsidiaries, Essar Steel Limited, Essar Shipping Limited, and Essar Oil Limited. Essar Steel Has three manufacturing complexes, the Hazira Steel Complex and Vishakhaoatnam Pellet complex in India, and a 400,000-tonne cold rolling complex in Dhananjava, Indonesia, operated by subsidiary PT Essar Dhananjaya.

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