Kudremukh Iron Ore Company Limited (KIOCL), the 100% 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 Karnataka government's recent decision to grant mining licence to those who will 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 Tumkur district by the state government which has an iron ore deposit of about 10 million tonnes and may last for 4-5 years," K Ranganath, Chairman and Managing Director, KIOCL said.
He added: "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 cannot 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."
Addressing a press conference, here today, he said the company is looking for a partners to form a joint venture to set up the steel plant. It plans to take 26 per cent stake in the new company an invest 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 upto 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 set 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 currently, Ranganath said. However, it will continue to sell its products under the brand name "Kudremukh" and retain the existing the logo of the horse face.
For the third quarter ended December 31, 2008, KIOCL Ltd 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 fiscal. Its sales dropped by 70 per cent to Rs 95.8 crore during the quarter.
