Mahindra, Nippon JV to open Sharjah plant

26/03/2012 07:47 AST

Mahindra MiddleEast Electrical Steel Service Centre, or MME, a joint venture between Mahindra Intertrade Ltd of India and Nippon Steel Corporation of Japan, will open its transformer cores facility in Sharjah today.

The new plant, set up at a capital expenditure of $3.5 million, has been designed for an annual throughput of 5,000 tonnes of transformer cores with an aggregate annual turnover at designed capacity (18 million as at present) of $30 million, said Harsh Kumar, managing director, Mahindra Intertrade Ltd. Mahindra Intertrade is a wholly owned subsidiary of the $14.4 billion Indian multinational Mahindra Group.

MME marked Mahindra Group's first foray in the Middle East when it set up an electrical steel service centre in Sharjah in 2005. The facility is the largest supplier of processed electrical steel in the GCC, and has the distinction of being the first such service centre facility in the region.

"MME's new transformer cores facility is based on state-of-the-art technology with equipment sourced from the world leader in lamination line technology, Heinrich Georg Maschinenfabrik, Germany, and will bridge a critical supply chain gap for transformer majors located in the Middle East," said Kumar.

He said the size of the addressable market for electrical steel across the MENA region is roughly estimated at 35,000 to 40,000 tonnes per annum. With the region poised to witness more growth in power generation and related infrastructure, the segment will be requiring more upgrades, both for power generation and distribution functions. "GCC's power sector is being expected to grow to a capacity of over 135GW by the year 2015, which represents a huge jump from the current capacity of 75 GW."

MME will invest a total of $6 million in the upgrade and development of our facilities in the region to meet the demand growth.

Kumar said the vibrancy of the market has largely contributed to the company's turnover of over $15 million for the fiscal year 2011. "Drivers for the market lie in the clear-cut focus on setting up new power generation capacity in the region and the need for related infrastructure. With the supply chain continuously evolving, analysts have predicted a key shift from in-house manufacturing of transformer cores to outsourced partners. This shift makes for a favourable environment for the electrical steel-processing segment. Mahindra is confident and bullish on consolidating and aligning our market presence across this expected growth."

He said the new production facility in the UAE has been designed to meet an annual throughput of 5,000 tonnes per year, which can be further scaled up to 6,000 tonnes. Hundred per cent of the company's production is from its facility in Sharjah.

On Mahindra's relationship withy Nippon Steel, Kumar said it reflected "a tried and tested partnership" that spans over six decades. "At present, we are the exclusive partner of Nippon Steel for the distribution and the processing of its electrical steel products in India and the Middle East."

On Mahindra's future plans in the Middle East region, Kumar said his company is looking to double its output when it implements the second phase of the facility in the near future. "The plan is to ultimately meet the demands and requirements for processed electrical steel across the MENA region and also Eastern Europe from our production facility in the UAE. Our focus goes beyond the UAE and stretches out to the whole GCC region like KSA and Oman, as the UAE only represents 10 per cent of our sales.

Khaleej Times