A bright future ahead for UP steel

Next year will be a good year for the steel industry, even if the current year, especially the second half, is not turning out to be as good as was expected.

Mohan Steels Chairman Vikram Kothari told Business Standard performance had improved considerably since last year but a great deal more was required.

Kothari, a strategic investor, had invested Rs 3.50 crore to take a 50 per cent stake in the company. In addition, he had given Rs 7 cr as unsecured loans.

"Prices of scrap are pretty high and it is not possible to sell finished product profitably. However the buoyancy in raw material prices is temporary and the market is confident that this situation will soon get rectified, as the demand is bound to grow due to huge forthcoming investments in the infrastructure sector. Next year, we expect a boon year for infrastructure projects," he said

Mohan Steels is a 33-year-old company promoted by the Kejriwal family. It has been in the steel business making long products. Its main products include steel rods, bars, and wires. It chiefly produces TMT bars of various specifications like 8mm, 10mm and 20 mm, all used in construction industry.

The company went into huge losses in 2003-04, when it ran for three months only and achieved a turnover ofRs 397 lakh, and through the extraordinary income of Rs1066 lakh, was able to show a surplus of Rs 901.55 lakh. After deductions, the company was left with a deficit ofRs 665.02 lakh. It was at this stage that Vikram Kothari, of Rotomac pens fame, entered the company

With investment in equity and interest free loan, consequently, the authorised share capital of the company increased, and today, the firm is on the steady path to recovery.