After recapitalisation and refinancing $1.4 billion, Essar Steel Algoma is looking to expand. In an email interview with Ishita Ayan Dutt, Essar Steel Algoma president and chief executive officer Kalyan Ghosh said the company has identified a number of growth opportunities that will create over 200 new jobs. Edited excerpts:
What kind of financial headroom will the recapitalisation and refinancing give Essar Steel Algoma?
The recapitalisation resulted in significant deleveraging of the balance sheet by more than $200 million. It further reduced annual cash interest expense by more than $47 million. This combined with a new revolver with $50 million availability will provide the company with the necessary liquidity on a go-forward basis.
Essar Steel Algoma has identified a number of optimisation and strategic growth opportunities, not the least of which is the starting up of number six blast furnace, which will increase capacity, further improving the company's cost competitiveness, creating over 200 new jobs and providing opportunity to expand into targeted new products and markets. In addition, the business is planning an extensive investment in the modernisation and optimisation of its plate mill to better service existing and evolving markets.
Essar Steel Algoma generated an EBITDA of Canadian $85 million in the last quarter, is the worst over? What is the outlook for Algoma?
Essar Steel Algoma undertook a transformative journey culminating in the comprehensive recapitalisation and refinancing of the business. With a targeted high value-added product mix, a strong contract position, improving reliability and quality, low cost production, the outlook is very positive for Essar Steel Algoma.
What is the capacity utilisation in Essar Steel Algoma now?
Last quarter, the company was operating at 92 per cent capacity utilisation and production continues to be strong.
What is the demand scenario in North America now and how is Essar Steel Algoma poised?
The North American steel industry is heavily influenced by three key markets: automotive, construction and energy. Metrics in all three are improving with sustained growth in shipments and consumption.
What restructuring exercises have been undertaken by Algoma since acquisition and what is the cost impact?
Improving productivity, improving volumes, improving product mix and reducing costs are all aimed at improving margins and now we are among the top quartile margin steel producer.
What is the total employee strength of Algoma now and to what extent has it been rationalised since acquisition?
Various automation and efficiency initiatives have enabled the company to reduce staffing levels from 3,300 in 2007. Current employee count is approximately 2,800. All reductions have been achieved through natural attrition and in combination with a step change improvement in productivity from 725 net tonnes per employee in 2007 to nearly 1,000 net tonnes today.
What kind of financial headroom will the recapitalisation and refinancing give Essar Steel Algoma?
The recapitalisation resulted in significant deleveraging of the balance sheet by more than $200 million. It further reduced annual cash interest expense by more than $47 million. This combined with a new revolver with $50 million availability will provide the company with the necessary liquidity on a go-forward basis.
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What kind of growth opportunities is the company now in a position to consider?
Essar Steel Algoma has identified a number of optimisation and strategic growth opportunities, not the least of which is the starting up of number six blast furnace, which will increase capacity, further improving the company's cost competitiveness, creating over 200 new jobs and providing opportunity to expand into targeted new products and markets. In addition, the business is planning an extensive investment in the modernisation and optimisation of its plate mill to better service existing and evolving markets.
Essar Steel Algoma generated an EBITDA of Canadian $85 million in the last quarter, is the worst over? What is the outlook for Algoma?
Essar Steel Algoma undertook a transformative journey culminating in the comprehensive recapitalisation and refinancing of the business. With a targeted high value-added product mix, a strong contract position, improving reliability and quality, low cost production, the outlook is very positive for Essar Steel Algoma.
What is the capacity utilisation in Essar Steel Algoma now?
Last quarter, the company was operating at 92 per cent capacity utilisation and production continues to be strong.
What is the demand scenario in North America now and how is Essar Steel Algoma poised?
The North American steel industry is heavily influenced by three key markets: automotive, construction and energy. Metrics in all three are improving with sustained growth in shipments and consumption.
What restructuring exercises have been undertaken by Algoma since acquisition and what is the cost impact?
Improving productivity, improving volumes, improving product mix and reducing costs are all aimed at improving margins and now we are among the top quartile margin steel producer.
What is the total employee strength of Algoma now and to what extent has it been rationalised since acquisition?
Various automation and efficiency initiatives have enabled the company to reduce staffing levels from 3,300 in 2007. Current employee count is approximately 2,800. All reductions have been achieved through natural attrition and in combination with a step change improvement in productivity from 725 net tonnes per employee in 2007 to nearly 1,000 net tonnes today.