Promit Mukherjee

Mumbai: Welspun Gujarat Stahl Rohren is planning a 2 million tonne per annum (TPA) steel plant in Mundra under its backward integration plan. It is also looking at some iron ore mines in Brazil.

The plant is second step towards backward integration-first being its 1.5 million TPA plate mill at Anjar,Gujarat which is expected to be commissioned in March.

Though Akhil Jindal, president, Welspun Gujarat, declined to talk about the plan, calling it “extremely premature”, he said that the company, at one time, was recruiting engineers and experts for proposed steel plant at Mundra.

The company is currently focused on the plate mill coming up at Anjar and a 0.3 million TPA pipe manufacturing capacity in the United States, he said. The plate mill has capacity of 1.5 million TPA and the US-based pipe facility is up to 0.3 million TPA.

Jindal said Welspun is also focusing on other plans such as the longitudinal submerged arc welded (L-SAW) pipe mill which is being augmented by 0.3 million TPA and helical SAW pipe mill capacity by 0.15 million TPA. All these facilities will be operational by Q2 of 2008-09, except the LSAW mill which is scheduled to be commissioned by March 2009.

An analyst tracking the steel sector said the company has hinged its plans of the steel plant on the iron ore capacity which it is currently scouting for in Brazil. “There are three competitors for some iron ore mines in Brazil, but chances are quite likely that Welspun will bag them,” he said.

He said the mining assets are being pursued by the Welspun group as a whole and Welspun Gujarat will only have a minority stake in them. The reserves of the mines were not immediately known.

By the time the status of the mines are decided,Welspun will be well into its expansion and it will be the right time to announce another step of backward integration. “The steel plant may be announced by the end of August 2008,” he said.

Though there was no information available from the company on the kind of steel plant planned, another analyst said it would necessarily be a plate-cum-coil facility, much on the lines of its Anjar plant.

The Anjar mill is a 1.5 million TPA steel plate plant being built at a cost of Rs 1,800 crore. It is importing iron slabs as a raw material to feed the plate mill.

“For a 2 million TPA capacity of a plate-cum-coil plant,Welspun would require an investment of close to Rs 2,400 crore,” he said.

If the company plans to manufacture even iron slabs the cost could even go up to Rs 4,000 crore. Currently, the Welspun Gujarat has a capacity of 1 million TPA of pipes. The current expansion programme is being implemented with an investment of close to Rs 800 crore.

Source : DNA