RINL shifts focus to flat steel

Rashtriya Ispat Nigam Ltd (RINL) has decided to expand into the flat steel business with the changing dynamics of demand.

Chairman and Managing Director P K Bishnoi said the country’s largest long steel maker was looking to enter the flat steel market in a big way. Long steel mainly comprises products like bars, re-bars and wire-rods, which are used in the construction and infrastructure space, while flat steel is used in sectors like the automobile and consumer goods sectors.

He said up to 7.3 million tonne (mt) capacity from the current 3.3 mt, would be for long steel maker. “However, the 4 mt that we plan to add after the 7.3-mt expansion, we will focus on flat steel.”

RINL is already in talks with Bharat Heavy Electricals Ltd (BHEL) and Steel Authority of India Ltd (SAIL) for joint ventures (JVs) to cater to the country’s flat steel demand. It is also in talks with banks to raise Rs 22,500 crore to fund the expansion.

Bishnoi said talks with BHEL for an equal JV in a Rs 5,500-crore plant to manufacture CRGO and CRNO steel, used in making transformers, were on. RINL has proposed SAIL to form a JV for making steel, according to him. According to the proposal, the plant will be set up at RINL’s Vizag facility and SAIL will supply iron ore to it. However, he is more hopeful of the talks with BHEL materialising sooner than SAIL.

RINL is also in the process of setting up a railway axle plant. “The Railways has given us the land and axle making is a very high value-added product,” he said.

All other steel makers in India have already set their eyes on this lucrative high margin segment and are adding capacity in that direction.

For JSW Steel, its sales in the flat steel category grew 31 per cent in 2010-11 to 4.7 mt from 3.6 mt in the previous year. This is set to grow, as the company commissions a new 3-mtpa blast furnace at its Vizag plant this financial year.

Essar Steel Chief Executive Officer Malay Mukherjee had told Business Standard in a recent interview: “The company is trying to enter into sectors that other Indian steel makers are not present in. Our first attempt and the marketing strategy is to tackle imports that are coming in. As you know, flat product imports are of 7 mt. Out of the 7 mt, 1.5-2 mt is plates. That's why we have set up the plate mill at Hazira. Our strategy is to tackle the rest of the imports, which has automotive grades of 1.5-2 mt.”

Essar Steel, present only in the flat steel space, hopes to go up the value chain, with its 10-mt expansion getting completed in 2012.

Tata Steel is also setting up a 6-mtpa plant in Orissa to make flat products. Already a leader in auto grade steel supply in India, it is setting up another plant with Nippon to strengthen its position.