Bhushan Ltd to increase output by 40 per cent

Bhushan Power and Steel Ltd, a Rs 3,000-crore group in Chandigarh, is expected to raise its output by 40 per cent without any incremental investment.

The back-end support provided by its upcoming plant at Sambalpur in Orissa is responsible for the rise in output.

A senior executive of the company told Business Standard sponge iron plates, sheets and wire rod would be transported to the plants of the company, located in Chandigarh and Derabassi (Patiala), from Orissa.

This would cut the transportation costs substantially. Earlier, the company was importing iron ore from Orissa, and then iron ore was converted into value-added inputs at the units located in north.

The Sambhalpur unit, located near the source, will process iron ore. It would be more cost-effective to transport intermediate items, as freight loss will be less. Hot rolled sheets and sponge iron are the main inputs required for the units located in north and Bhushan supplies inputs to the automobile and infrastructure companies of the region.

Bhushan is a major supplier of steel components to automobile companies in the country, which includes units in Maharashtra, Karnataka, Tamil Nadu, Uttaranchal and Himachal Pradesh.

The scale of production in the existing units would be upgraded without any addition of fixed capital as the machines would now run for the longer duration.

The company's foray into power generation at Sambhalpur also helped it register lower costs. Of the 100 Mw of power generated, half is consumed in-house and the balance is sold in the open market through Reliance. An addition of 250 Mw is in the pipeline.

If the wheeling of power gets constitutional clearance, this would help in cutting cost further as the units located in states other than Orissa would be able to consume the surplus power generated at Sambhalpur plant.