Steel no longer hot: Swraj Paul

Steel has ceased to be the most profitable of businesses and may not be attracting high levels of investment support in the years to come, Lord Swraj Paul, founder and chairman of the multinational steel group Caparo plc of London, said here yesterday.

Investors in the developed world were generally unwilling to invest the $2 billion or so required to set up a new steel plant of competitive capacity because returns were not as attractive as investments in any number of competing investment priorities, he said. As a result, it was unlikely that any new steel plant would come up in the developed world.

The family-held company, in which business units were currently being managed by Paul's three sons, was instead looking at opportunities in new areas like entertainment, films and information technology.

The Caparo head, who is also a Labour Party leader in United Kingdoms, said the new areas and tourism appeared to offer much higher returns at present.

However, this has not stopped Caparo from investing in manufacturing units for steel products in north and central India, with a third plant in Gujarat due for commissioning very soon.

These plants produced steel components for the automobile sector in the country, and buyers included companies like General Motors India. Caparo was one of the best-known manufacturers of steel and its products worldwide.

The Caparo chairman, now a member of the House of Lords, said steel would continue to attract investments in India because of the healthy growth of the automotive sector but producers in countries like China appeared to enjoy some advantages over Indian producers in the long term.

He said his group would explore opportunities in steel related to the automobile sector as and when opportunities arose.

China had emerged as the main buyer of steel in the world and the current boom in the sector was mainly on account of buying by Chinese importers.

Investors were unwilling to put in large sums in the hope of selling steel to just one market as it was too risky, he said.