The Essar Group is setting up a 1.5m tonne per annum plate mill at Hazira, adjacent to Essar Steel's integrated steel plant. The mill will, however, not be a part of Essar Steel and will be called Hazira Plates. It will be owned by a separate company controlled by the Ruia family.

Industry sources said that a joint venture partner is also involved in the project, but the name of this partner could not be ascertained.

The mill will be built by Siemens VAI and will be capable of producing steel plates up to 5 metres wide. The mill will also produce its own slabs, which will be rolled into plates.

The plate mill is estimated to cost the company around Rs 1,500 crore and is expected to start production by the end of '06.

The Essar group has been carrying out expansions in steel capacity outside the Essar Steel banner as the steel company's activities are subject to stringent monitoring by its lenders. The capital expenditure of Essar Steel is also under scrutiny by its lenders and any new project requires their consent.

The company, however, is now believed to be close to paying off the lenders. Essar had earlier, in a similar fashion, set up a cold rolling and galvanising mill under the name Steel Corporation of Gujarat (SCGL), which was eventually merged into Essar Steel.

The company was a joint venture between Essar and Stemcore of UK, a steel trading company. The company is setting up the plate mill to supply plates to the auto industry and other industrial applications. Currently, Steel Authority of India (SAIL) is the largest manufacturer of plates in the country.

Essar, which is currently the largest exporter of steel in the country, is also looking at exporting a significant part of the plates produced at Hazira Plates. Plates fetch a premium, compared to other steel products like hot rolled coils