Foreign firms to buy stake in small steel firms,value-addition
Anticipating a steady long-term growth in India, foreign steel makers are interested in acquiring stakes in small firms and forge joint ventures for value addition of raw materials.
"Some prominent overseas steel makers are keen to buy Indian steel story that ensures steady growth for next 30 years. They are keen to buy stakes in steel firms here which have 2-3 million tonnes per annum capacity," Ernst & Young's National Leader (Mining and Metals) Anjani Agrawal told PTI.
At the same time, they are also interested in entering the value addition space hoping to test the investment climate in India without committing significant investments.
Agarwal said these companies may even go for a minority stake to enter the supply chain and test the environment.
"Such strategic investments in smaller steel mills can actually be beneficial for both the investor and the local company. The local partner gets both funding and technology while the MNC gets a foothold in a growth market for several years to come," he said.
Agrawal said India's demand for steel is poised to go up to around 200 million tonnes per annum in next 10 years from a little over 77 million tonnes per annum in 2012, calling for massive investment for capacity expansion. In 2013, it is set to clock at least around six per cent growth.
"However, it is not sure if India will be able to match up with installed capacity as greenfield expansions are facing a lot of difficulties. This may escalate imports," he said, adding this might
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