Essar turns around sick steel unit acquired from Ajmera

Pune, June 29: The Essar Steel Pune Facility (ES PF), Essar Steel India' s downstream galvanizing and pr e-coated steel manufacturing unit, has turned around and is all set to cross the R3,000-crore turnover mark with a capacity utilization nearing 100% this fiscal.

Essar had acquired the lossmaking Shree Precoated Steel Limited from the Ajmera Group in August 2009 for around R600 crore and has turned around the unit into a ' significant' profit- making business.

It has also become the largest maker of pre-painted galvanized iron products in the country with a 51% market share in the domestic market. This business now accounts for around 15% of Essar’s turnover.

Despite a difficult year for the steel industry and dumping from China, the company was able to report a good recovery in performance, RV S rid h ar, CEO, ES PF, said.

“The strategy of exploring untapped market spaces, sweating existing assets, cost reduction and product innovations have aided growth,” he said. This quarter the company also benefited from the MIP imposed on steel imports from China since February 6,2016, he said.

The Pune plant is running at nearly 100% and is the only unit in the cold rolling segment in the country to run at full capacity, Sridhar pointed.

ES PF was able to ramp up production and increase sales volumes by 71% to 4,62,000 tonnes and grow revenues by 45% to R2,070 crore during FY16. Going by the run rate in the first quarter of FY17 the current year production is set to increase by 35% to 6,25,000 tonnes and a turnover of around R3,200 crore, Sridhar said.

When the domestic market was sluggish the company expanded its international markets and now exports to 110 countries. “In the pre-painted segment, we offer 4,000 colours and products with non-standard width, smaller gauges to counter competition from China. This was about exploiting the chinks in the Chinese armour,” Sridhar said.

Export accounted for 40% of the company's turnover last year with 60% of the exports coming from Europe.