Aaress Iron & Steel Ltd (AISL), the unit of Baldota Group, is setting up a new Rs 4,700-crore steel plant at Koppal, in northern Karnataka to cater the needs of the automobile industry and other high-value added engineering segments.

The project will be executed in two phases and the company aims to start production by mid-2010 with an initial capacity of 1.2 million tones annually. The total capacity of the plant is expected to be around 5 metric tones. 

According to the company, two-third of the investment for the first phase will be raised through debt and the facility would manufacture special carbon and alloy steel grades, billets and wire rods during the first phase. 

Furthermore, AISL proposes to increase the annual capacity to 5 million tones by 2012, which would be used for producing hot-rolled flat products.

AISL intends to employ about 3,500 workers for the entire project which will need about 2,000 acres of land. 

According to the latest reports, the demand for special steels in India is expected to grow to 6 million tones annually by 2010, from the current level of 4.5-5 million tones.