Essar Steel enters UK with Servosteel buy

Written by fe Bureaus | Mumbai | Updated: Jun 30 2010, 05:07am hrs
Ruia-owned Essar Steel on Monday announced that its subsidiary Essar Steel International BV has acquired UK-based steel processor Servosteel (Oakside Solutions Ltd), marking its first-ever buyout in that country. Essar Steel International BV, a subsidiary of Essar Steel Holdings, announces that it has acquired Servosteel (Oakside Solutions), the largest independent steel processor in the UK, the company said in a statement here. The firm, however, did not disclose the deal amount.

Servosteel is a Dudley-based steel service centre in West Midlands and offers service for SCS (smooth clean surface technology), pickling, slitting and decoiling and various individual custom tailored services. Servosteel has an annual steel processing capacity of 0.5 million tonne. The acquisition is in line with Essar Steels distribution strategy, the company said in a statement.

Analysts are surprised by the companys move of making an acquisition in the UK in the current scenario. However, a Essar Steel spokes person told FE, We are entering the UK market by acquiring this service centre where we would get access to maximum customers.

Essar Steel currently has four service centres in India. They are located in Chennai, Pune, Bahadurgad (Near Delhi) and Hazira (Gujarat) with a total capacity of 2.7 million tonne. It also has one service centre in Indonesia.

Essar Steel has a global steel production capacity of 8.6 million tonne per annum (MTPA). Besides India, it has facilities in Canada and the USA.

To tap the growing steel market, Essar Steel is focusing on service centres that provide tailor-made products of the metal to consumer industries, including ones in the automobile and consumer durables sectors.