Visa ties up funds for Orissa project

Visa Industries Ltd (VIL), the manufacturing arm of Kolkata trading conglomerate Visa group, has completed the financial closure for the initial part of its one million tonne per annum integrated steel and stainless steel project coming up at Kalinganagar Industrial Complex in Jajpur district of Orissa.

The project is estimated to cost Rs 1600 crore will be implemented in three phases.

Under phase I of the project, Visa Industries is setting up a 250 cubic meter blast furnace for producing 2,25000 tonne per annum pig iron, a five MW heat recovery power plant and 0.5 million tonne per annum iron ore crushing and screening plant.

About 70 per cent of the first phase construction work is over and the commissioning of the blast furnace is expected by December 2004, says Bishambhar Saran, chairman of the company.

The investment in three units under phase I is envisaged at Rs 124 crore against which the company has already brought in the entire requirement of equity of Rs 44 crore.

Based on the debt equity ratio of 65:35, Visa Industries has been granted a term loan of Rs 80 crore at an interest rate of 10 per cent per annum. The State Bank of India, Allahabad Bank and Uco Bank are providing 40 per cent, 35 per cent and 25 per cent of the term loan component.

This apart, the company is setting up an eco friendly stamp charged beehive coke oven plant for producing four lakh tonne per annum LAM coke for which the civil construction work has started and necessary applications for term loan have been submitted. The debt equity ratio for the coke oven plant is also fixed at 65:35. The coke oven plan is likely to go on stream by March, next year.

Saran said, the entire one million per annum capacity is expected to be fully operational by 2008 and will have a product mix of stainless steel bars, alloy steel rods and bars and stainless steel flats.

He said, the company is using Tata Korf technology for the blast furnace which is proven to be very cost effective.

On phase-wise commissioning of the project, he said, it will result in singular concentration on the successful commissioning of each unit, enhanced capacity utilisation and the utilisation of the cash flow of the previous unit in commissioning the subsequent unit, leading to a relatively low capital cost and a relatively short learning curve.

Meanwhile, the company has applied for chrome ore, iron ore and coal mining leases for raw material linkages to the various facilities of the project.

"We hope to emerge as one of the lowest cost steel manufacturers in the world in terms of capital, raw material and conversion cost so that we are competitive in any market", Saran added.

The present operations of Visa Industries Ltd, include a 50,000 tonnes per annum chrome ore benefication plant for exports mainly to China and a 50,000 tonne per annum chrome ore drying-grinding-bagging plant for production of fine chrome ore powder for the domestic chemical industry. Both these plants are located at Golagaon in Jajpur district, Orissa.