Essar Steel invests into UK’s Servosteel

From: investinuk
Published: Wed Jun 30 2010

Essar Steel, the Ruias owned company, Tuesday reported that it had successfully acquired Servosteel (Oakside Solutions), the UK’s biggest independent steel processor through its subsidiary, Essar Steel International BV. As the largest steel processing company in the UK, Servosteel processes about 500,000 tonnes of steel per annum.

Essar Steel did not however divulge the details of the investment amount, rather noting that it was a major investment in line with its expansion and distribution strategy. This becomes the company’s first major acquisition in the UK. Currently in a quest to tap the growing global steel market, the company has shifted its focus to service centers that offer tailor made products of the metal to consumer industries, such as in the automobile and consumer durables sectors.

On the overall though, Essar Steel Holdings global steel production output stands at 8.6 million tonnes yearly with seven global centers located in India, Indonesia and Canada and an average capacity of more than 3 million tones yearly.

In Early 2010, Essar Steel Holdings’ subsidiary, Essar Steel Middle East, had put forward plans for the setting up of a processing and service center in Dubai with an estimated processing capacity of 2,500,00 tonnes. Essar Steel’s UK acquisition adds the company the additional 500,000 tonnes Servosteel capacity, with further reports that the company is still keen on acquiring an Egyptian company, Knadil Steel.

Recently, Essar Steel Holdings has been on the prowl for investments making acquisition after acquisition with an overall increased output. The Essar Group conglomerate with interest in various lines of businesses is controlled by brothers Shashi and Ravi Ruia. Essar Steel ltd is one of India’s biggest steel producers, with 14 Mtpa of capacity. It has facilities in India, Canada, Indonesia and USA. Servosteel is a Dudley-based steel service centre in West Midlands and offers service for SCS (smooth clean surface technology), pickling, slitting and decoiling and various individual custom tailored services.

"The acquisition is in line with Essar Steel’s distribution strategy," the company said in a statement. Pundits were taken aback by Essar’s decision to make an investment in the UK given the current prevailing economic situation. Essar Steel Holdings’ spokesperson reiterated that the company was keen on the UK market and was entering it through the acquisition of the Servosteel service center to enable it access maximum customers. Dudley is a world renowned steel processing hub and Essar aims at exploiting the potential available in the UK and its other close markets

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