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Essar Steel Turnaround

The all-round efforts of the company in various facets of its operation have resulted in an excellent operational turnaround and resurgence of Essar Steel
March 16,2016
  • Capacity utilisation doubled and planned to operate at 80% - 85%
  • Projects completed at a competitive cost
  • Lower gas prices and other input prices
  • EBIDTA margin in line with industry peers at 18% - 20% 
  • Raw material security
  • Government support measures against Dumping / Predatory Prices

Hazira, March 15, 2016: The all-round efforts of the company in various facets of its operation like production, sales & marketing and cost improvements have resulted in an excellent operational turnaround and resurgence of Essar Steel. The production has doubled since November and is currently operating at 70% capacity utilisation. This has resulted in significant improvement in EBIDTA margin which has improved to 18%-20% from 5% in November last year.

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Essar Steel is set to achieve a capacity utilization of 80%-85% in the financial year 2016-17

Projects completed at a competitive cost
Essar Steel has completed all the upstream and downstream projects at a competitive cost to achieve 10 MTPA and all units have become operational. The availability of gas at economic price has enabled Essar Steel to operationalise the gas based DRI units as well. This is further aided by the captive gas from COREX and Blast furnace.

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Commenting on the performance, Mr. Dilip Oommen, MD & CEO  said, “Our efforts over the last few months in strengthening our operations, supported by stable markets and  encouraging  response from our customers, has given us the confidence to aim at full production in the next fiscal. It is heartening that we are able to achieve this while maintaining higher operating margins. We believe it is comforting to all our stakeholders.”

Lower gas price and other input prices
The gas price has fallen to USD 6/mmbtu from USD 15/mmbtu. Lower gas price and other input costs have enabled the company to contain its costs and improve margins. Essar Steel expects to restart all the DRI units in the next fiscal.

The customer outreach initiative undertaken by the company has facilitated it to sell not only its production but also enable it carry one of the lowest finished goods inventory in the industry at 15 days leading to better working capital management. The multi modal transport adopted by Essar Steel enabled the company get better price in its major markets of Gujarat and Maharashtra.

Raw material security
Essar Steel has tied up all the critical inputs required for steel making. The Company has recently won an iron ore mine in Odisha through auction. This mine has a deposit of 99 million tonnes. This mine will meet 50% of annual iron ore requirement of Paradeep pellet facility.
The pellet plants at Paradeep and Vizag are operational and ensure consistent supply of pellets to the steel plant. The abundant availability gas at economic cost has further supported Essar Steel’s efforts to ramp up capacity.  

Government’ support to the Steel industry
The introduction of MIP and BIS standards by the Government of India has curbing imports of steel at predatory prices leading to containing oversupply situation and better sales realization in the Indian market. 

About Essar Steel
Essar Steel India is one of India’s leading integrated steel producers with an annual production capability of 10 MTPA supported by a 20 MTPA pellet facility. The state-of-the-art facilities comprise iron ore beneficiation, Pellet making, iron making, steel making, and downstream facilities, including a cold rolling mill, a galvanizing  and pre-coated facility, a steel-processing facility, an extra-wide plate mill and 3 pipe mills with coating facilities.

Essar Steel uses information technology extensively for its operation to ensure consistent quality of its products. It produces over 300 grades of steel conforming to quality standards of international certification agencies like API, ABS, NACE, Lloyd’s Register to name a few. The products, many of which are import substitute products, cater to the requirements of a wide cross section of industries.

Essar Hypermart, a pioneering initiative of Essar Steel, caters to the requirements of the SME segment, which normally does not have access to mill material directly.

Sustainability has been given due importance and the company is on course to becoming a zero-waste company.

Media contact:
B.Ganesh Pai, VP - Corporate Communications, Essar Steel
Phone: +91 98197 30225, Email: ganesh.pai@essar.com

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