The ever increasing demand of steel in the global market has prompted India’s leading steel manufacturer Gujarat-based Steelcast Limited to invest around Rs 107 crore to expand and upgrade its facilities so as to increase its production capabilities.
The surge in demand is mainly due to the demand in exports. Nearly 45% of the company’s sales are coming from exports and it is expecting even more growth in demand from the US and Europe.
The company says that Rs 65 crore of the total investment of Rs 107 crore will be used to expand its facilities at the Bhavnagar plant in Gujarat.
The first phase of the expansion will include increasing of steel casting manufacturing capacity to 30,000 tonnes per annum (tpa) in 2012-13 from 24,000 tpa in FY12. During the second phase, the production capacities will be raised to 38,000 tpa in 2013-14.
Speaking about the company’s plans, Chetan Tamboli, CMD of Steelcast Ltd, said that the entire investment of Rs 107 crore will be funded through advances from customers, long-term debt and internal cash accruals. The company hopes that with the setting up of new capacities, the turnover of the company will be doubled within the next 3 years. It is expected that there will be a strong growth in demand for the company’s products in both the domestic and global markets. The company’s books are usually full for 7-8 months, informed Mr Tamboli.
Manash Sengupta, a Jamshedpur resident and steel industry expert says, “The steel industry has witnessed robust growth over the last fiscal and Steelcast’s expansion plans are part of this growth. According to a recent report by the Global Steel Association, the demand for steel in the global market is expected to go up by 5.4% and these are mere reflections of it.
In spite of the economic slowdown, the company has continued to project robust growth in sales and profits because of the fact that its main consumer industry, which is mining equipment, is on an up-trend.