Vedanta looks to focus on long product steel with upcoming capacity

Firm will enhance facilities to high carbon electrical steel, other value added products. It is working to double capacity to 3 million tonnes for which it has invested Rs 3,000 crore

Vedanta Ltd, the newest player in the integrated steel business, plans to focus on long products and ductile iron products for its brownfield expansion of 5 million tonnes. It would further enhance facilities to high carbon electrical steel and other value added products. “In the first phase we are working to build capacity to 3 million tonnes (capacity from 1.5 million tonnes now) and have invested Rs 3,000 crore for the same. In the second phase, we will be taking the capacity to 5 million tonnes,” Sauvick Mazumdar, chief executive officer at iron and steel business, Vedanta Limited, told Business Standard.

The Anil Agarwal-led Vedanta Ltd already has an integrated greenfield facility of 1.5 million tonnes steel capacity at Bokaro, Jharkhand. The two-phase expansion is to be completed in the next 2-3 years.

Vedanta entered the steel business with acquisition of Electrosteel Steels in 2018 via the National Company Law Tribunal (NCLT) platform.

With regards to financial arrangement to go to 5 million tonnes, Mazumdar said that the current focus is on augmenting capacities and arranging finance would not be a problem given the multi-commodity business the Vedanta Group is into.

Typically, it takes Rs 4,000-5,000 crore to set up a one-million-tonne steel unit.

“At our steel plant, we will be focusing on long products and ductile iron products. Going forward, we will then look at high carbon, electrical steel and further value added products of the commodity,” said Mazumdar.

In the domestic steel market, a relatively new entrant Vedanta Limited is competing with Tata Steel, the country’s oldest steel producers along with Naveen Jindal-led Jindal Steel & Power, which has presence in long products and with state-owned Steel Authority of India. Sajjan Jindal-led JSW Steel and AM/NS India are other two large primary steel producers in the country.

At present, India’s per capita consumption of steel stands at 75 kg, while the world average is 225 kg. With this, there is enough room for players to set up new capacities to capture the market.

“India steel consumption market is growing and has enough room for all players including new entrants. Due to this, there is no problem of survival or competition or both for any steel player in the domestic market,” said Mazumdar.

Alongside, at its one-million-tonne pig iron facility in Goa, the company looks to expand to 1.5 million tonnes in turn taking total steel capacity for Vedanta to 6.5 million tonnes.

Analysts were of the view that with exports of ore having become difficult and unattractive due to export duty and various restrictions, it makes sense for Vedanta to augment capacities at its pig iron facility as it would yield better margins than selling ore in the market.

Pig iron is used for making steel and pure iron units. It has very high carbon content along with silica.

As per Joint Plant Committee (JPC) data, India’s pig iron production stood at 4.35 million tonne during April-February FY21, down 15.6 per cent from same period last year.

In the period under review, the private sector led pig iron production with 86 percent share compared to the 14 per cent contribution of the public sector undertakings, said JPC.