In this interview, Vikram Amin, Executive Director – Strategy & Business Development, Essar Steel explains how the company has been continuously focusing on value addition and development of new grades of steel for different segments. He also discusses a new theme Essar is rolling out for its valuable customers.
Essar Steel's 10 MT Hazira Steel Complex has ramped up its sales volume by nearly 50%. Where will the future growth come from?
We have developed steel for various segments like automotive, light engineering, infrastructure, Defence and many more. We expect Infrastructure and construction sectors to boom in the next few years as Government policies are favourable with higher Budget allocation of USD 80 billion for infrastructure, Defence and low cost housing.
The National Steel Policy 2017 aims to increase steel capacity from 122 MT to 300 MT by 2030. What will be Essar Steel's contribution in meeting this target?
Essar Steel has always focused on value addition and development of value-added grades, which is one of the objectives of National Steel Policy. Essar Steel heartily welcomes the new Steel Policy announced by the Government of India. This is a holistic Policy that addresses all facets of the industry, including raw materials and demand generation. It envisages buying Indian steel for Indian projects. We have developed new grades of steel that is required for infrastructure projects. It is worth noting that we have already supplied steel to some of the marquee projects like Chenab River Bridge in J & K, Bogibeel Bridge across Brahmaputra River in Assam, Value-added grades of steel for the auto sector, usage of low-grade ore for producing steel etc. Thus, we are fully geared to meet the objectives of the Steel Policy.
Of late Essar Steel has developed new product grades for several applications, including special steel grades for Defence segment. Could you please tell us about the new products and their usages?
Developing new grades of steel is a way of life at Essar Steel. More than a quarter of revenues that we generate are from the products developed and commercialised in the last couple of years. We have developed steel for all Defence applications, earthmoving equipment, solar energy sector, auto sector and many more. Most of these products are value-added, import-substitute products developed as per customer requirements. We have also been awarded and recognised by our customers for our capability to supply steel the way they want it.
Being the largest flat steel producer, what is the present market share of your flat steel business?
Our focus is on supplying steel that our customers require rather than on gaining market share. We have rolled out a new theme "Steel the way you want it". This is a customer centricity theme that encompasses their expectations like quality the way they want, the grades & shapes the way they want, the delivery, the way they want and at a price they want. Thus, we would like to shape the way steel is being marketed in India.
In terms of exports, what volume range are you looking at? What are the main regions you are serving at present and is there any plan to expand your export business?
Our export volume at present is at about 22%. Our main focus areas are Middle East and European markets, where we export high value-added products. We will continue to focus on domestic market.
Please tell us about your recent partnership with POSCO on flat steel products.
POSCO is one of our major customers. The deal with POSCO clearly establishes that we are a stable long-term supplier and offer quality products consistently. The MoU envisages that POSCO will buy 1.1 million tonnes of flat steel products during the current fiscal. Both of our plants being located in the west and hence we are not only able to adhere to their quality standards & delivery timelines.
How much raw material will Essar Steel be importing this fiscal?
Essar Steel is self-sufficient in terms of its oxide requirements. Last year, we produced over 9 million tonnes of pellets. Only raw material that we need to import is coking coal and limestone.
How much the GST implementation will influence your sales target?
GST will be beneficial to the steel industry. VikramAmin We don't think it will have any adverse impact on our sales target. Though initially there could be odd teething issues, GSTwill be a game changer It is more about enhancing cost competitiveness than sales impact.
Going forward, Essar Steel has retail outlets under the brand name 'Essar Hypermart'. How much these outlets have benefited customers in terms of steel availability?
The steel retailing through Essar Hypermart has immensely benefitted SME segment in terms of availability of quality steel in quantities they want it. The strategic location of Hypermart was beneficial in terms of accessibility. We have sold on an average a million tonnes of steel per year through this channel.
What role will Essar Steel play in digitalization to support the growth in rural and semi-urban areas in India?
For growth in rural and semi-urban areas in India, our strategy is to focus on grassroots solution. Making steel available at a competitive cost, providing solutions in steel usage and provide support with marketing efforts are a few key pointers towards digitalization. It is important to increase steel intensity in various rural initiatives to drive steel demand.