AS Steel plans sponge iron plant in Orissa

Investment for plant put at Rs 40-45 crore

Vizag-based A S Steel Traders, a leading steel and cement trading company, is planning to set up a sponge iron plant with 6 mw captive power generation in Orissa with an outlay of Rs 40-45 crore.

A S Steel Traders is currently running a TMT bars manufacturing unit "� Blackgold Profiles Private Limited "� in Visakhapatam. It has also quoted bids for acquiring the Orissa government-owned chemical unit in Bhuwaneswar at Rs 9.2 crore, which is the highest amount quoted among the bidders.

"At present, Blackgold Profiles is depending on Visakhapatnam Steel Plant (VSP) for its main raw material "� steel billets. VSP may not be able to supply the raw material in future. Keeping this in mind, we have decided to set up a sponge iron plant including a 6 mw captive power generation with an outlay of Rs 40-45 crore," A Nagesh, managing partner of AS Steel Traders and managing director of Blackgold Profiles, told Business Standard.

A S Steel Traders is aiming to achieve a 13-15 per cent growth in turnover this fiscal. The company's last fiscal turnover was Rs 150 crore.

"We are targeting to achieve a turnover of Rs 170-175 crore this fiscal. During the first half of current fiscal, The company's turnover touched Rs 77 crore as compared to Rs 67 crore achieved in the corresponding period of last fiscal. In addition to this, our cement trading turnover has touched the Rs 3-crore mark in the first half of the current fiscal," Nagesh said.

"As there is plenty of iron ore reserves available in Orissa, we are setting up our plant outside Andhra Pradesh. But if the Andhra Pradesh government provides power on concessional rates in addition to the concessions on sales tax, we may then consider setting up the plant in the state only," he said.

"The promoters will contribute 20 per cent of the outlay while the remaining amount will come from financial institutions," he added.

"The proposed unit will produce close to 30,000 tonnes of material annually. This material can be used as raw material in our TMT bars manufacturing unit at Vizag," he added.

The construction work of the proposed plant will start next fiscal. We plan to start the production within a year from the date of commencement of the construction," Nagesh said.

Blackgold Profiles produces 30,000 tonnes of 8 mm to 20 mm TMT bars a year. The company has achieved a turnover of Rs 50 crore last fiscal. It expects to clock a Rs 60-crore turnover this fiscal due to a significant hike in steel prices.