Essar Steel, the flagship of the Ruias, has finalised a plan to open a countrywide chain of steel distribution centres. The distribution stores would display not just products of Essar Steel, but also that of other steel companies.

One such store has already been opened in Sachin near Surat in Gujarat. J Mehra, managing director of Essar Steel, told Business Standard: "The concept is aimed at targetting small traders and consumers and would help in widening the market base. This will enable us to penetrate into the rural as well as the urban segment simultaneously."

Analysts said a distribution centre concept could considerably cut down the marketing and inventory costs of not just Essar Steel, but also of other steel companies, provided Essar eventually sets up an extensive network.

The centres will be stocked with wide range of steel products like plates, sheets, structurals, galvanised or colour coated sheets, bars and rods of different steel manufacturers to serve as a `one-stop steel shop' for the consumers.

Essar Steel also plans to strategically tie-up with local entrepreneurs for the necessary infrastructure, and is working on the franchisee details.

The company has sharpened its focus on the value added segment and on its cost-cutting drive, Mehra said. The operations of the company now stands vertically integrated from iron ore to value added hot skin-passed hot rolled coils, plates and sheets. Its cost cutting measures include reduced power consumption and use of optimum product mix.