Essar Steel Pune facility eyes turnover of Rs 3,000 cr for FY17

Essar Steel Pune Facility (ESPF) is eyeing a 43% jump in turnover to Rs 3,000 crore for FY17. The unit is located at Sanaswadi near Pune. 

The galvanising and pre-coated steel manufacturing unit produces 6 lakh tonnes of processed steel every year with capacity utilisation nearing 100% this fiscal.

"Despite a difficult year for the steel industry and dumping from China, the company was able to report a good recovery in performance. The strategy of exploring untapped market spaces, sweating existing assets, cost reduction and product innovations have aided growth. This quarter the company also benefited from the minimum import price (MIP) imposed on steel imports from China since February 6, 2016," said RV Sridhar, CEO, ESPF.

Essar had acquired loss-making Shree Precoated Steel from the Ajmera Group in August 2009 for around Rs 600 crore and has turned around the unit into a significant profit-making business. 

ESPF's turnaround has been triggered primarily by process innovations, operational excellence, low rework, expansion into new international markets, and a renewed focus on the domestic market and the value-added product range. 

ESPF offers products like camouflage steel, wood finish, abrasion resistant systems and wrinkle finish products, which cater to customers from automobile, defense, home appliances, construction and industrial sector. 

According to Sridhar, ESPF has also become the largest maker of pre-painted galvanised 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.

ESPF was able to ramp up production and increase sales volumes by 71% to 4,62,000 tonne and grow revenues by 45% to Rs 2,070 crore during FY16. Going by the run rate in the first quarter of FY17, current year production is set to increase by 35% to 6,25,000 tonnes and a turnover of around Rs 3,200 crore. 

Exports

Even with a lull in global steel markets, ESPF has successfully maintained its position in exports. Along with value added products, the company is making inroads into geographies like Africa, NAFTA and EU. It expects to export 1,00,000 tonnes in the current year. 

On exports, Sridhar said that the company exports 14% of production in international markets and 86% in the domestic market and hopes to maintain the ratio due to higher domestic demand for its products. 

During FY16, ESPF added over 125 customers in the international market. It also doubled its customer base in the Middle East and some other regions. ESPF exports its products to more than 110 countries across the world.  Exports accounted for 40% of the company’s turnover last year with 60% of the exports coming from Europe.

At present, the retail market for steel products in India is around 8 MT. Essar Steel had posted gross revenues of Rs 17,162 crore in 2014-15 fiscal.