Ispat to invest Rs 900 cr in capacity expansion

Firm plans 50% increase in HR coils production within 2004-05

Ispat Industries Ltd is set to invest about Rs 900 crore to step up its production capacity of hot rolled coils by 50 per cent to 3.6 million tonnes by the end of this financial year.

It also plans to acquire iron ore and coal mines in India and abroad to ensure a continuous supply of key raw materials, senior company officials told Business Standard.

The capacity is being planned to be further hiked to 5 million tonnes during 2005-06 as the company gears up to meet a projected strong growth in demand for steel in the country, they added.

"As per the government's white paper on steel, even if we expect 6-7 per cent rise in volumes on a conservative basis, we will easily touch 50 million tonnes by 2011-12 in the country," the officials said.

The National Steel Policy, being prepared by the ministry of steel, is likely to set a domestic production target of 60 million tonnes by 2010 and 100 million tonnes by 2020, up from 36 million tonnes at present.

According to the Ispat officials, about Rs 320 crore would be used for the expansion of hot rolled coils capacity, while Rs 305 crore would be allocated for a captive power plant.

A further Rs 162 crore and Rs 15 crore would be invested for the oxygen plant and cinter plant respectively, while Rs 90 crore would be pumped in for the coke oven plant.

The setting up of the cinter plant would enable Ispat to save money by using iron ore fines and then make pellets and finally, sponge iron. At present, it buys pellets from other producers. The bigger oxygen plant would also be established by US-based firm Praxair, they said.

The investment for the expansion at its plant in Dolvi (Maharashtra) is part of the corporate debt restructuring package, which has been approved by Ispat's bankers, including IDBI, SBI and ICICI last year.

The officials said the company was also exploring acquiring or operating iron ore or coal mines on long-term lease in India or abroad, especially in Eastern Europe and Australia.

In India, Ispat has just received a license to undertake iron ore mining in Sindudurgh, Goa. It has also applied for licenses in Orissa and Jharkand.