NEW DELHI: The India business of European stainless-steel giant Outokumpu has become the latest victim of the global slowdown and the resultant demand of Indian industry for protection from imports. The company, with a turnover of e7 billion, has put on hold its plans to invest up to Rs 300 crore in India to set up a service centre.
The Indian arm of Outokumpu imports high-grade steel produced by its parent and supplies it to Indian customers including exporters, who supply kitchenware and household items to global biggies like Wal-Mart. Indian kitchenware industry exports over one lakh tonne of steel products and a large volume of these items are produced using imported CR coils/sheets of premium quality.
The decision was taken after the government initiated an anti-dumping investigation against steel imports, exporters who source steel from Outokumpu. Indian steel producers have sought anti-dumping duty on steel imports, as they fear cheap imports, especially from China and CIS countries, would flood the Indian market.
Ingela Ulfves, vice-president at Outokumpu, confirmed that the MNC was not going ahead with its plan. “The decision to continue any of Outokumpu’s investment projects would be subject to a separate decision based on updated market view and feasibility study. For the time being, most of Outokumpu’s investment projects are postponed for at least 12 months,” said the official.
Outokumpu’s service centre was to be located in Maharashtra, and the company was targeting a turnover of around Rs 1,000 crore per annum, since India is a key emerging market for stainless steel, industry sources associated with the Indian arm of the company said on conditions of anonymity. The service centre was a key piece of the steel giant’s plan to meet specific needs of Indian customers, they added.
The service centre was planned with an annual capacity to stock and process 50,000 tonne of stainless steel coil and plates. It was scheduled to be operational by early-2010. Interestingly, the company is going ahead with its plan to set up a service centre in China, while the India project has been put on the backburner. In China, the company will invest around e20 million. In comparison, the investment in the proposed Indian service centre works out to e45 million.
“In these uncertain times, Outokumpu has to prepare for difficult times ahead and since the original investment programme is fairly extensive, there is a need to focus on short-term liquidity and profitability. As part of this, almost the entire investment programme is being postponed with the investment in the Indian service center being part of this decision. Currently, only necessary investments are being made. The outcome of the ongoing anti-dumping investigation is still unknown and no risk can be taken regarding any investments,” Ms Ulfves said.
“Investments for capacity expansion in Finland and Sweden as well as investment in service centres in France, Germany and Poland will be postponed,” the mail added.
Source : The Economic Times