Arjas Steel to invest Rs 610 cr to augment capacity to 5.5 L tonne

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Arjas Steel, formerly Gerdau Steel, on Wednesday announced a Rs 610 crore capex to increase its annual production capacity to 5.5 lakh tonne, adding over 37.5 per cent to its existing capacity across its Andhra and Punjab plants.

The company operates two plants at Tadipatri in the Anantapur district of Andhra Pradesh and at Mandi Gobindgarh in Punjab. The Andhra plant has a current capacity of 3 lakh tonne while the Punjab facility, which it acquired in November 2020 for about Rs 100 crore produces 1 lakh tonne per year.

Of the total capex, around Rs 350 crore will go into the Tadipatri plant expansion and the rest Rs 260 crore will go into the Punjab unit, Sridhar Krishnamoorthy, managing director said in a statement.

The company said the capacity additions will be completed in 2025.

Arjas supplies steel to energy, automotive, Railways, and defence units as well as exports.

In Tadipatri, investments include a new Kocks sizing block from Germany which will help improve quality and throughput as well as a Garret coiler line to produce speciality steel in coil form. The unit will also add new stoves and more steel refining capacity to boost output.

The expansion will increase the capacity at Tadipatri by 25-30 per cent.

The Punjab unit will have a new emission control system, improved steel-making and rolling and other critical quality assurance systems installed which will increase the output at this plant to 60-70 per cent from current levels, he said.

The November 2020 Arjas acquired the auto components business of Modern Steel in Punjab for a consideration of around Rs 100 crore.

Both companies manufacture specialised steel for the automotive sector. After the acquisition, Arjas Steel will be able to supply steel products to clients like Maruti and Hero Morocorp.