Essar may close Shree Precoated buy soon

The Ruia-controlled Essar Steel may sign on the dotted line to buy Shree Precoated Steels in a week, a company official told DNA on condition of anonymity.
The deal will make Essar Steel India’s largest cold-rolled steel producer.

The official said the deal is likely to be inked in a week. Shree Precoated Steels is part of real estate developer Ajmera group. It has the capacity to produce 6 lakh tonne of cold-rolled steel, 4.5 lakh tonne of galvanised steel and 3.5 lakh tonne of colour-coating line.

DNA had broken the news on July 7. Essar Steel declined to comment on the deal but said it is looking to increase its sales to the auto sector. Vikram Amin, executive director (sales and marketing), Essar Steel said, “We sold 25% of our 3.1 million tonne steel production last year to the auto sector and are looking to sell over 1 million tonne this year.”

The company supplies majorly to Maruti, Hyundai and Tata Motors in the passenger car segment, and to Tata Motors, Ashok Leyland and Eicher Motors in the commercial vehicle space.  

It also supplies steel to two-wheeler makers. Amin also said that the company is in talks with German carmaker Volkswagen to supply raw material for the company’s India plant.

Amin said Essar currently has 1.4 mt of cold-rolled capacity and caters to the domestic market only. It is looking to increase this capacity. “The automotive sector is growing and we are looking to increase our cold-rolled production in line with the market demand,” Amin said.

The company is currently expanding capacity at its flagship Hazira unit from 4.6 mt per annum to 10 mt. “The expansion is likely to be completed by 2010-11,” said Amin.