The company has initially invested Rs 30 crore on the plant, set up in 10 acres, to function as a one-stop shop for processed electrical steel requirements.

It will manufacture laminations for transformer cores, providing a high-tech processing back-end for transformer OEMs located in Gujarat, which has recently witnessed surging growth in the power sector led by MNCs such as ABB and now Areva, said Mr Bharat Doshi, Executive Director and Group Chief Financial Officer, Mahindra Group.

There are only seven to eight players in this segment in the world, he told Business Line, adding the business potential in India itself is huge, given the Government's plans to add 80,000 MW capacity by 2012.

The plant's location near Vadodara ensures proximity of the facility to power transformer manufacturers most of whom are located in Central and Western India. It offers cutting-edge equipment imported from technology leaders in the metal forming space, having the widest lamination line configuration to meet the demand of even the largest transformer in the world, said Mr Raghunath Murti, President, Trade, Retail and Logistics Sector.

The domestic transformer industry is set to benefit from the strong demand expected from reforms in the power sector.

The Government has also shifted focus from adding generation capacities to strengthening the distribution system.

Increased energy and power requirements would push up the demand for transformers which, in turn, would increase the demand for electrical steel, the officials said on the sidelines of a function.

MIL had set up the country's first steel service centre Mahindra Steel Service Centre, in 1993, near Pune together with its Japanese partners Mitsubishi Corporation and Nissho Iwai Corporation (now Metal One Corporation) for home appliances and transformer industries.

In February 2005, the company expanded this network to West Asia with a facility at Sharjah and set up a joint venture with Nippon Steel Corporation of Japan.