Kudremukh Iron Ore Company (KIOCL), the 100 per cent export-oriented unit under the ministry of steel and mines, has proposed to set up a steel plant in Karnataka as part of its forward-integration plans at an estimated investment of Rs 9,000-10,000 crore. The company's move comes after the Karnataka government's recent decision to grant mining licence to the companies which invest in a steel plant.
"We are waiting for allotment of a bigger mine in Karnataka for the sustenance of the company in the long run. Recently, we were granted a mining lease at Chikkanayakanahalli in the Tumkur district by the state government, which has an iron ore deposit of about 10 million tonnes and may last for 4-5 years. But in order to survive for a longer period, we need bigger mines with about 150-200 million tonnes of iron ore deposits. As per the new rules of the state, we can not get a mining licence unless we do value-addition like producing steel. In order to secure a new mine, we decided to go in for a forward-integration and set up a steel plant," K Ranganath, chairman and managing director, KIOCL, said.
Addressing a press conference here today, he said the company is looking for partners to form a joint venture for the proposed steel plant. It plans to take 26 per cent stake in the new company at an investment of up to Rs 500 crore. "We have a cash reserve of Rs 1,200 crore and as a mini-ratna company, we do not need government approval to invest up to Rs 500 crore as equity in a joint venture company," he said.
Ranganath said the company proposes to rope in a partner having expertise in producing steel or with a captive iron-ore mine in their possession in Karnataka for setting up a joint venture company. "I am going to place the proposal at the board meeting later this month and once the board decides, we will invite expression of interest from the interested companies to join hands with us for setting up the steel mill," he added.
Meanwhile, the company has changed its name as KIOCL Limited with effect from January 22, 2009. The existing name of the company was not in consonance with the natue of activities being carried out by the company at present, Ranganath said. However, it will continue to sell its products under the brand name "Kudremukh" and retain the existing logo of the horse face.
For the third quarter ended December 31, 2008, KIOCL has reported a net loss of Rs 79.7 core, compared to a net profit of Rs 20 crore in the corresponding quarter of last financial year. Its sales dropped by 70 per cent to Rs 95.8 crore during the quarter.
