Essar Steel aims to double revenue to Rs 40,000 crore in 2013-14 from Rs 18,000-20,000 crore in 2011-12 following the expansion of capacity at Hazira steel plant and commissioning of pellet plant in Odisha, a top company official today said.
"Our revenue will be Rs 40,000 crore once we reach steel production capacity of 10 million tonne per annum at our Hazira plant in Gujarat by FY14. We have also commissioned a 6 million tonne pellet making facility in Odisha, which is the first phase of the 12 million tonne pellet plant to be set up by 2013," Essar Steel Chief Financial Officer Amit Agarwal said.
The company has invested Rs 4,200 crore to set up an integrated facility as part of its ongoing investments in Odisha, Agarwal said. He added that the company has already invested over Rs 37,500 crore in expansion of Hazira facility to create the largest flat steel plant in a single location.
The company’s debt is estimated at Rs 20,000 crore, Agarwal said.
The Odisha facility includes a 12 million tonne per annum iron ore beneficiation plant at Dabuna and a 253 km slurry pipe line connecting Dabuna and Paradip.
The pellet plant in Paradip along with the Visakhapatnam plant's capacity of 8 million tonne per annum will fully secure the iron ore requirements for Essar Steel.
Once the 12 million tonne Paradip facility is completed, along with pellet capacity of 8 million tonne at Visakhapatnam, Essar Steel will have a total pellet making capacity of 20 million tonne per annum making it the largest pellet producer in the country, Essar Steel Managing Director and CEO Dilip Oommen said.
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Essar Steel has adopted an integration and securitisation strategy that has enabled it to keep its costs low. The bulk of its iron ore needs have been secured through off-take agreements with key players like NMDC, private miners in Odisha, and captive mines in Jharkhand and Chhatisgarh.
The company has also applied for the iron ore mines in Odisha and is optimistic of positive response from the state government, Oommen said.
Commenting on fuel supply, Oommen said that the company will slowly move from gas based to coal power based in fuel supply in the near future.
It is currently buying 25% of fuel supply from spot gas and 75% through corex gas. However, it will set up 400 kv transmission line to source coal power, which is very cost effective, Oommen said.