‘Indian steel industry growth can surpass GDP growth’

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: supplies with the Australian companies. We are also looking at other countries like Indonesia and Canada to ensure that we secure the coal that will be required by the company in the years to come. We are also working to own coal mines, which will further save the cost of production.

What are your expansion plans? How are you planning to finance the same?

In India we have been growing and aggressively expanding our capacities. We were a 1.6 million tonne steel plant in 2003. Within just four years time, we have today become close to 4 million tonne capacity and are further expanding it to 6.8 million tonne. We aim to become a 10 million tonne steel plant by 2010. Considering the infrastructure growth in India we are also diversifying into long products having application in construction and infrastructure industry. We have incorporated 1.5 million tonne of long product capacity in our existing capacity expansion plan.

As the global steel majors are anchoring grounds in Indian steel market, how have you planned to take on the threat of the intensifying competition?

India needs about 65 to 70 million tonne of steel by the year 2010, and if we consider the brown field projects alone it would not be possible to meet the growing demand by the year 2010-11. So there is enough room for the green field projects in India, whether it is from the existing players or new players.

Steel prices have been stagnant for a long time. Besides this, there is ramping up of capacities in the industry. What is your take on this?

Compared to other commodity companies, steel companies are looked at in isolation, with low P/E multiple in the market. As aluminium companies command higher P/E multiple, due consolidation happened in the aluminum sector which has not happened in the steel sector. Now the activity of the consolidation is intensifying in the steel sector. The consolidation will result in stability in the prices of steel. Earlier, Japan used to lead price negotiations for buying iron ore. Now, it is China, being the largest steel producing and consuming country and accounting for almost 40% of the world steel production. Therefore, the power of negotiating increases being the largest player.