Essar Steel, India’s third-largest steel manufacturer, will invest Rs 200 crore to set up three service centres in the country, to cater to its clients in the auto and white goods sectors.
Each of the three centres — in Pune, Chennai and the National Capital Region (NCR) of Delhi — will have a capacity of 250,000 tonne. Essar Steel already has a 1.25-million tonne service centre at its Hazira steel facility, taking its total capacity in servicing to 2 million tonne.
Essar’s initiative comes at a time when other Indian companies are also looking to set up service centres that mainly add value to basic hot-rolled and cold-rolled steel products and fetch better margins.JSW Steel had recently bought a service centre in the UK and Tata Steel, through its joint ventures with BlueScope of Australia and Ryerson of the US, caters to the housing and auto industries, respectively.
Service centres process hot-rolled and cold-rolled steel into custom-made products. For instance, it will make tubes, compressors or control panels for automobile makers, or thin sheets for white goods makers. “Each of the locations is a hub for auto companies and will make high-end, sophisticated products. We will get closer to our customers,” Essar Steel’s director for sales and marketing Vikram Amin told ET.