Outokumpu scraps plan for Rs 1k-cr unit plans

Finnish stainless steel major Outokumpu has decided to scrap its plans of setting up a cold rolling stainless steel mill in India for the time being. The move comes a year after the company announced setting up the project.

The company took the decision after undertaking a feasibility study.

A year ago, Outokumpu had announced that it would be setting up the mill with a capacity of 250,000 tonnes in the western part of the country at an investment of more than Rs 1,000 crore.

Sources close to the development said the decision was taken by the Outokumpu board and its executive committee in view of the market scenario.

Industry experts said a standalone cold rolling mill was not be viable since it would depend on external supply for steel and other inputs, which would involve higher cost and time.

“Only an integrated facility is viable,” said the industry source.

Industry representatives indicated that there was no change in the demand for stainless steel, which was growing at 9-11 per cent and even higher in certain sectors like architecture, building and construction. This is in contrast to Europe and the US, where growth is 3-5 per cent.

 

SKIPPING ACTION

Outokumpu had announced that it would set up a cold rolling mill with a capacity of 250,000 tonnes in India

The company decided not to proceed with the investment at this point after undertaking a feasibility study

The decision was taken by the Outokumpu board and its executive committee, in view of the market scenario

However, while the company has decided against setting up a mill, it will be upgrading its original plans for developing a service centre. The service centre is expected to be operational by the first quarter of 2010.

The coil service centre, being built in India, is to be expanded from the original plan to become a combined coil and plate service centre. The original investment for the service centre was supposed to be in the region of Rs 189 crore, however, that would now increase, said sources.

Outokumpu is still exploring options of strengthening its presence in the growing Indian market. However, as of now, the investment plans appear to have been scaled down. Outokumpu has approved an additional capital expenditure for all service centre investments in France, Germany, Poland, India and China of Rs 378 crore.

Outokumpu India, a wholly-owned subsidiary of Outokumpu Oyj, was set up in 2006 to cater to the Indian market. The subsidiary started off by setting up sales and marketing offices in the country.