Gerdau Steel India is Bullish on Automotive Specialty Steel

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Brazil’s top steel producer, Gerdau, seems to be well on its path to making its India operations turn a profit by 2016.

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The company, which is listed on the Sao Paulo and New York Stock Exchanges, recently said with a rise in demand for specialty steel in India, its wholly-owned Gerdau Steel India subsidiary, which mainly serves India’s automobile sector, is trying to double its sale over last year.

Counting on Automotive Specialty Demand

The demand for specialty steel is rising across the auto sector, and Gerdau India expects to sell 200,000 metric tons this calendar year, a report in Financial Chronicle said. Sridhar Krishnamoorthy, Managing Director at Gerdau Steel India, said “The market is looking up. The demand for our steel is rising from across the auto sector, and we will be able to sell 2 lakh tonne (200,000 metric tons) this calendar year,”

Krishnamoorthy revealed the company recently received an order to supply specialty steel to some Japanese automobile companies in India, which were also Gerdau’s global clients.

How Did Gerdau Get to India?

Gerdau entered India in 2006-07 through a joint venture with Kalyani Group to acquire the SJK Steel Plant at Tadipatri. Gerdau took almost total control of the business in 2013. At that time, it was only making pig iron and billet.

Since then, the company has invested in a factory in the southern province of Andhra Pradesh, and in setting up the state-of-the-art production specialty steel production facility. The plant consists of iron and steelmaking facilities, has an installed capacity to produce 300,000 metric tons of specialty steel per year, he said. The integrated steel factory also supplies steel to India’s defense, rail and related industries.

New Products

The Brazilian multinational recently started selling a new type of steel for the US, Brazilian and European automotive industries. According to the producer, the material was 20% more resistant to heat and pressure, and will be used in diesel engines, mostly for pistons.

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Krishnamoorthy said the company adopted a 2-pronged strategy to make the operation sustainable. It is cutting down the sale of merchant bars, a commodity steel item, and was increasing the sale of value-added products to the more lucrative auto component sector.

Krishnamoorthy, being a company man, said the market is looking up, and the India operations will be able to break even and start making a profit in 2016.

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