VSP hit hard by raw materials shortage

In fact, the coking coal crunch, mainly due to the fall in supplies from Australia, is threatening to undermine VSP's bottomline.

"The coking coal stocks are barely enough to last till March 20 and if the supplies do not improve, the shutting down of the three coke oven batteries of the steel plant appears imminent at this stage, " Sivasagar Rao, director (commercial), told Business Standard.

The shutdown of the coke oven batteries would undermine the production cycle and their revival itself is likely to take 30 to 40 days.

VSP's demand for three lakh tonnes of coking coal a month is largely met by three suppliers in Australia.

"Every month, we get 2.5 lakh tonnes of coking coal from Australia while the remaining 50,000 tonnes sourced from domestic mines. But recent supplies have fallen drastically due to a series of accidents in Australian mines also due to the breakdown of the coking coal reclaimer at the loading port in Australia," he revealed.

The situation is said to be more critical in SAIL plants where some coke oven batteries have already shutdown, Sivasagar Rao said.

Last month, Rao went to Australia as part of the steel ministry's delegation to study the alternatives for regular coking coal supplies. He said that the company was meeting an Australian supplier in Delhi on March 15 for negotiating a deal to quickly meet the shortfall in coking coal supplies.

During the current year, VSP has also been hit by a shortage of iron ore supplies from the Bailadilla Ore.

The company, therefore, has taken the steel ministry's permission for acquiring iron ore mines. However, VSP has still posted a 24 per cent growth in sales turnover during April-February this fiscal, when compared to the corresponding period last fiscal.

"During the last fiscal, our total turnover was Rs 5,057 crore. We have already crossed this figure in February and the company has achieved Rs 5,335 crore turnover during the first 11 months of the current fiscal as against Rs 4,288 crore in the last fiscal, thus registering a growth of 24 per cent," Sivasagar Rao said.

"In February, the company's sales touched Rs 558 crore and by the end of this month, we are trying to reach a total sales turnover of Rs 6,000 crore," he said.

"On the exports front, the company is targeting a growth of 37 per cent this year when compared to the last fiscal. During the last fiscal our exports were Rs 544 crore and this year we may touch Rs 750 crore. The company has achieved a turnover of Rs 676 crore till February, " Sivasagar Rao added.