Neelachal in Rs 1000 cr long products plan

The Neelachal Ispat Nigam Ltd (NINL), a joint venture of MMTC and Orissa government, has chalked out Rs 1000 crore investment plan for production of long products.

The company, at present producing pig iron, is in the process of appointing consultant for the forward integration project. "We have received two bids from Dastur & Co and Mecon in this regard, said SD Kapoor, CMD of MMTC and chairman NINL.

NINL, for the first time since going into production in 2002, has earned a net profit of Rs 71 crore in FY 2004-05. This is an impressive performance considering that the company's net was minus Rs 110 crore in August last year," said S K Sarna, managing director, NINL.

Meanwhile, the company has targeted Rs 1,600 crore turn over (against Rs 1,100 crore last year) and a net profit of 150 crore in the current financial year.

Kapoor said, the Rs 1000 crore expansion project will comprise of a one million tonne capacity steel melting shop and bar and rod mill to produce long products. The project will be completed in three years.

The new investment is based on a debt equity ratio of 1:1. He said, the demand of steel in the country and especially that of long products is growing and during 2004-05 domestic consumption of steel is likely to increase by 7-8 per cent to reach a level of 38 million tonne.

He attributed the turn around in the fortunes of the company and a massive jump in profits to reduction in cost of production of pig iron and favourable market conditions.

The captive production of metallurgical coke has significantly contributed to substantial growth in production in NINL, he said. Meanwhile, the coke unit, Konark Met Coke Ltd (KMCL) has been merged with NINL bringing further synergy in plant operations, he added.

NINL produced 6.16 lakh tonne of hot metal, 5.52 lakh tones of pig iron, 3.62 lakh tonne of blast furnace coke and 8.13 lakh tonne of sinter during 2004-05.

The growth of hot metal production over last year was 31 per cent and pig iron 35 per cent. Both sinter plant and coke oven battery have attained above 80 per cent capacity utilization rate in the first year of operation itself.

NINL's contribution to total pig iron production in India during the year was about 25 per cent. The plant exported about 2.78 lakh tonne of pig iron valued at Rs 390 crore registering a growth of 188 per cent.

With this, NINL has become the single largest exporter of pig iron in the country. NINL also supplied about two lakh tonne of granulated slag, 17,000 tonne tonne of crude tar and about 5,000 tonne of (Kamdhenu) fertilizer (ammonium sulphate) to cement and other industries and agro sector during 2004-05.

The captive power plant of NINL supplied 24,000 million units of power to Gridco after meeting full requirement of the plant. The company will commission gas turbine in first half of 2005-06, which will enable it to increase sale of surplus power.

During the year, about 1,17,000 tonne blast furnace grade coke was supplied to Vizag Steel Plant, Bokaro Steel Plant, Mesco, Kalinga Iron Works etc.

The company is also developing iron ore mine of 2 million tonne capacity in Sundergarh /Keonjhar districts of Orissa. The mine will be in production in the next 2 years to meet increasing requirement of iron ore for which exploration work is in advance stages.

The company has planned production of 7,50,000 tonne of Hot metal and 6,75,000 tonne of Pig Iron during 2005-06 respectively, a growth of 22 per cent over 2004-05.

The plant also envisages production of 6,60,000tonne of Blast Furnace coke registering a growth of 56 per cent over the production of 2004-05.