The current economic downturn provides the steel industry with an opportunity to expand capacity and strengthen its distribution network, according to Mr Shoeb Ahmed, Director (Commercial), Steel authority of India Ltd (SAIL).

 

Addressing an interactive session on future challenges before Indian industry, organised by the Indian Chamber of Commerce here on Saturday, Mr Ahmed pointed out that SAIL was already active on 10-million tonne (mt) capacity expansion and had joined hands with Rashtriya Ispat Nigam Ltd to strengthen its distribution network.

 

“Earlier, we had a network of 37 stockyards and 600 distributors, now expanded with the appointment of 2,500 dealers and agents with the plan to have a total of 5,000 shortly,” Mr Ahmed said. “We must make steel available at the doorstep of the common people”.

 

As for capacity expansion, his view is that it could be both brownfield and greenfield type, with an accent on production of more value-added items.

 

Turnaround

Quoting international experts, he pointed out that globally, the steel industry was unlikely to achieve a turnaround before the last quarter of 2010 or even early 2011. In December, global steel production at 84.4 mt was lower by more than 24 per cent as compared to production in the same month of the previous year, and between October-December 2008, the drop was 20 per cent, at 271 mt.

 

However, the situation in India would not be as bad, thanks to massive government investments being planned for infrastructure development, though the government investments would not be forthcoming immediately, but only after installing the new government at the Centre.

 

Interest outlook

 “The Railways have huge plans and with it, there will be more roads, highways, ports and power projects, boosting the demand for steel,” he observed. “The interest rate too will continue to remain low and on the fiscal side, we, the steel producers, have urged the government to slap higher duties on imported steel”.

 

The country’s steel production, he estimated, would rise to 85 million tonnes by 2011-12, from the present 55 mt. –Business Line