Essar Steel looks abroad for auto partner

Essar Steel wants to partner with a foreign company to consolidate its position in the automobile steel market in India. The company, soon to be a 10-million tonne per annum manufacturer, has 20-25 per cent of the auto steel market. It does not wish to lose any of it to the recent joint ventures formed by various Indian steelmakers with Japanese ones.

"We're getting a study done to identify which international auto companies are going to be big in India," Chief Executive Officer Malay Mukherjee told Business Standard. "We would like to tie up with their preferred suppliers of steel."

He said the study would enable Essar to decide on a partner for setting up an autograde steel manufacturing unit. The consultant's report is expected in three to four months.

He added, "Our point is, we will take help in making automotive steel. We don't only want the technology, but we also want that whoever is the provider enables us to open the door to its customers. Then only does it make sense."

Mukherjee said European or American car makers would always source their requirement from a European or American steel company. "For example, if a European auto maker is chalking out huge India plans, then we would like to partner with the European steel maker they are sourcing their steel from. So, I will go to the European steel maker to source the technology," he said. Adding: "We have an umbrella agreement with Kobe Steel (of Japan) and can always fall back on that."

On November 30, government-owned Steel Authority of India (SAIL) had also formed a collaboration with Kobe Steel for technology sharing, among other areas. SAIL said, "Studies will be undertaken to explore the possibility of producing high-value products, such as products for automobiles."

However, SAIL further said, if Kobe or SAIL had contractual agreements with other companies, the items covered under such agreements would not be considered for their agreement.

In the past year and a half, JSW Steel, Tata Steel, and Bhushan Steel had tied up with Japanese steelmakers JFE Corporation, Nippon Steel, and Sumitomo Metal Industries for producing autograde steel in India.

Essar is currently undergoing massive expansion and will become a 10-million tonne company from 4.6 mt by June next year.