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Mumbai: The arrival in the Indian market of ArcelorMittal, the largest producer of steel. Steel, will force private sector players to increase efficiency and control control costs, announced a third steel producer Tata Steel Ltd and JSW Steel Ltd, both having a financial fortune and expertise, should be good for the domestic market.
On Friday, lenders to the bankruptcy of Essar Steel said that the highest bid came from the joint venture of ArcelorMittal, a Luxembourg company, promoted by Lakshmi Mittal, as well as japanai companies Nippon Steel and Sumitomo Metal Corp. and had filed a resolution plan that offered ₹ 42,000 crore to buy back the badets of Essar Steel, which had accumulated a debt of over ₹ 49,000 crore.
Steel Essar has 10 million tons (mt) per year mill in Hazira, Gujarat. The company is a fully integrated flat steel producer with ore beneficiation, pellet manufacturing, iron making, steel and downstream facilities, including cold rolling mill, galvanizing , pre-coating plant, steel processing plant, extra-large sheet metal mill and mill tube. In its annual report for fiscal year 2017, the company had declared that it was the only private steel plant in the country to be allowed to supply steel for warships, sub-ships sailors, battle tanks and armored vehicles.
With the announcement of Friday, the joint venture managed by ArcelorMittal is about to conclude the contract with Essar Steel. Mittal is known to have built its career by buying stressed steel plants around the world – in Mexico, Romania, South Africa and the United States – and turning them into profitable businesses, usually by increasing just-in-time volumes. for the rising cycle of steel. and cost control.
Even as ArcelorMittal fights to take control of Essar Steel in India, it simultaneously acquires the Italian company Ilva, the largest European steelmaker by its capacity.
and make them profitable, "said Atanu Mukherjee, chairman of MN, global metals and energy consultant. Dastur. "They bought the Calvert facility in the United States (at Thyssenkrupp AG) and it is now a world-clbad steel-making facility."
"L & L India has always had a very fragmented steel market with many secondary producers, "he added." This is a problem because it does not allow you to achieve economies of scale or pricing power, and does not help the cost structure.With a concentration concentrated between three or four major players and some niche players in the value-added segment that supports them, India will have the ability to a more mature steel market without creating monopolies.The concentration ratio of steel is increasing faster here than in any other country, but it is good for the India. "The acquisition of Arcelor by Mittal Steel in 2005 has added to the balance sheet of the new entity with a debt of 35 In 1965, several attempts were made to set up operations in India, particularly with planned projects in Odisha and Jharkhand, but none took place. With Essar Steel, it does not come with a ready-to-count capability, but also at a time when India's steel consumption is taking off. India currently consumes 70 kg of steel per capita, less than half the average of other developing countries. The World Steel Association expects steel demand in India to increase 5.5% in 2018 and 6% in 2019, making it the fastest growing market among the top 10 steel consuming countries in the world.
"For ArcelorMittal, the opportunity is huge" of MN Dit Dastur. "The other markets in which they are located, mainly in Europe and the United States, are saturating. The Essar Steel plant will actually form the foundation of an expansion in India. In fact, they could even increase the capacity from 10 to 20-25 meters over the next decade. I do not think it's inconceivable. "
Despite a nominal capacity of 10 mt, the Steel Essar Steel Hazira works between 6 and 6.5 mt. The bulk of its capacity is powered by expensive imported natural gas, unlike its competitors, who use coking coal as a raw material.
"ArcelorMittal may have to invest 2,000 to 2,500 crores of rupees to reduce the bottling of the plant, convert its production into coal – the use of the total capacity of 10 million tons," said an badyst from a foreign brokerage firm. "If you look at Arcelor's balance sheet, its debt ratio is 1.2 or 1.3. It is now in a much better position to raise funds for the acquisition and operation of the plant. Making this investment is much more viable in terms of cost and time to set up a "greenfield" project. "
Ebitda is synonymous with earnings before interest, taxes, depreciation and amortization.
Increasing demand for automobiles over the coming years Over the next 10 years in India, ArcelorMittal will build on his partner Nippon Steel to create high quality flat steel.
"This will be the differentiator between ArcelorMittal, Tata Steel and JSW in India," said Mukherjee. "The last two are very good and have some partnerships with Nippon Steel and JFE Holdings, respectively.But ArcelorMittal has a long history in building automotive steels, in AHSS (Advanced High Strength Steels) .It is there that Arcelor is the best of the sector. "
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