In 1998-99 Essar wants to capture 23 per cent of the domestic market and step up exports from 357,674 tonnes in 1997-98 to about 500,000 tonnes. The company claims to be one of the lowest cost producer in the world, a claim which can be disputed but company has done a good job in turning out a world class product and marketing it successfully.

In 1997-98 Essar produced 1.53 million tonnes of HRC and capacity utilisation was 77 per cent but during the last quarter of the year, capacity utilisation had reached 93 per cent and in March 1998 it had touched 103 per cent. Therefore, it is reasonable to assume that Essar will be able to produce about two million tonnes of HRC in 1998-99.

The quality of the HRC is superior as it uses maximum possible HBI in its state of the art steel mill. In 1997-98 the HBIplant produced 1.7 million tonnes of HBI of which 90 per cent or 1.53 million tonnes was used in the steel plant. The HBI plant is now operating almost entirely on pellets from the captive pellet plant.

Essar has positioned itself in the niche market of HRC. Its market share of cold rolling/galvanising is 30 per cent, LPG sheets 38 per cent, plates and sheets 14 per cent, pipes and tubes five per cent and others 13 per cent.

According to Essar it is the only rolling MILL in India which can roll up to 2000 mm wide and 20 mm coils, and plates. It has a service centre equipped with coiled processing facilities comprising of two flying shear lines of capacity of 200,000 tonnes each and two slitting lines of capacity 200,00 tonnes each, stabilised and registered a 63 per cent volume growth with better prices. The hot skin pass/temper pass mill, expected to start in June/July 1998, will enable the company to cater to the thin gauge wider width segments yielding higher price realisation from both domestic andexport markets.

In export marketing, Essar has entered into long-term contracts with Commercial Metals Company Limited (CMC Trading AG), Zurich, totalling $335 million for three and five years. These contracts assure long-term offtake and prices are fixed every quarter. Essar has also entered into long-term contracts with international steel majors like Klockner and Thyssen.

All this is not enough to ensure continued dominance in a competitive market. It can be beaten in cost of hot metal and finished steel by its competitors and Essar is aware of it. It has also to reduce the interest cost which is crippling it.

Hence, the firm is seeking share holders's permission to raise $400 million in the international market and is raising the authorised capital from Rs 500 to Rs 600 crore. But in an uncertain foreign exchange market with the Rupee depreciating fast, whether to convert India rupee debt into foreign debt remains to be seen. The whole of Indonesian industry and part of the South Korean industry,including its giants like Posco, are not facing the threat of foreign take over at a low very price, because of the depreciation of their currencies against the dollar.

Essar wants to expand its pellet from 3.3 million tonnes to 7.8 million tonnes, construct a slurry pipeline from its iron ore benefication plant at Balladila to Vizag pellet plant to reduce the cost of transport.