New Delhi: The Indian venture of steel maker ArcelorMittal plans to increase production by 25% in the next fiscal to meet domestic demand from car makers and builders of rural homes.
Uttam Galva Steels Ltd’s output will rise to 1 million tonnes in the year ending 31 March 2011 from 800,000 tonnes in the current fiscal, director Ankit Miglani said in an interview. Annual sales in India are growing as much as 19%, he said.
Increasing demand for automobiles, refrigerators and air conditioners and rising farm incomes are boosting sales at Uttam Galva, India’s second largest producer of galvanized steel, and local rivals. Industrial production for August in the world’s second fastest growing major economy rose 10.4%, the most in 22 months, from a year earlier.
Upward spiral: Increasing demand for automobiles, refrigerators and air conditioners and rising farm incomes are boosting sales of steel.
“Rural demand has remained firm over the past several months,” Miglani said on Wednesday at the company’s Mumbai headquarters. “From roofs to furniture to cars, the usage of galvanized steel has increased.”
ArcelorMittal, the world’s largest steel maker, now supplies hot-rolled steel from its overseas mills to Uttam Galva’s plant in Maharashtra. Uttam Galva will use ArcelorMittal’s local production once the firm’s proposed plants in Orissa and Jharkhand become operational, Sudhir Maheshwari, a member of ArcelorMittal’s board, said last month. “We enjoy a natural advantage in buying raw materials from ArcelorMittal,” Miglani said.
Uttam Galva shares have more than quadrupled this year, outpacing the 79% rise in the benchmark sensitive index.
ArcelorMittal signed an agreement with the Miglani family on 3 September to buy a 5.6% stake in Uttam Galva. Luxembourg-based ArcelorMittal plans to acquire an additional 29.4% through an open offer of Rs120 a share starting 31 October, according to a statement last month. The offer will close on 19 November. The family owns 45.6% of Uttam Galva, Miglani said.
Uttam Galva, which sells half of its production overseas, also plans to build a 3-million- tonne capacity factory and mine for iron ore in Orissa, Miglani said. The company’s new board, which will be decided next month, will evaluate plans, he said.
The World Steel Association, which represents around 180 steel makers across the globe, said on Monday the emerging economies of China and India will rebound faster than developed nations. China’s steel output, the world’s largest, reached a record this year, aided by a $586 billion stimulus programme.