Anil K Joseph / PTI
Beijing: India’s multi-sector conglomerate, Essar Group has an open mind in investing in China, but the nation’s market rules and regulations are not mature enough for an immediate foray into sectors like steel, a top executive has said.
“I don’t think the market is mature yet here to get into a venture in terms of rules and regulations,” Essar group chairman Shashi Ruia told PTI here in an interview.
“But we’re here (in China) now and plan to stay for a longer time. We will evaluate every opportunity we come across,” Ruia said after announcing the opening of a new office of Global Supplies (UAE) FZE, an arm of Essar Global Ltd (EGL) in Beijing.
The Beijing office will concentrate on setting up a global sourcing base to procure capital goods required for Essar’s requirement in the steel, energy, power, communications, shipping, telecommunications and construction businesses.
“We have an open mind and we are trying to globalise our operations. With the market they have, China could be a very interesting place to be in,” Ruia said and added that he was keen on investing in China’s coal sector, which could be complimentary for Essar’s interests in the steel segment.
Ruia said that after several visits to China and first-hand information about its capability and capacity, he has found that most of the big Chinese companies are today not only in a position to supply but also undertake major plant and equipment deliveries of technical excellence equal to some of the best companies in the world.
“We have also found that over the years, some of the Chinese companies have not only acquired cutting-edge technologies, but also have become major suppliers to almost all the plant and equipment suppliers in the developed countries,” Ruia said.
“We are targeting the sectors we are currently engaged in: steel, energy, power, telecom infrastructure and infrastructure construction,” Ruia said, adding that India’s own infrastructure development will require huge capital equipment input, which could partly come from China.
Essar is also targeting constructing metro railways in Delhi, Mumbai, Hyderabad, Bangalore and Ahmedabad. “China could be a great source of equipment,” he said.
Essar Group will also participate in several infrastructure programs planned by the Government of India to speed up the economic development of the country.
It is estimated India will need over $50 billion in investments a year over the next five years to achieve the projected GDP growth rates of 8-9% a year.
Essar Group has finalized an investment plan of over $16 billion over the next four years in capacity enhancement and technological upgrades in its steel, power, communications, shipping, telecom and construction businesses, Ruia said.
Capital goods required for these projects are expected to be worth over $11 billion.
Over the next three years, Essar plans to procure over $5 billion of capital goods from China. It has already procured capital goods worth over $250 million from that country and expects this will reach a level of $1 billion by the end of this year.