Steel Exchange plans Mauritius arm, unit

Steel Exchange of India Ltd (SEIL), one of the leading steel manufacturer and distributor in the southern part of the country, is planning to set up a steel rolling mill with a capacity of 20,000 metric tonnes per annum capacity in Mauritius, which would be a 100 per cent subsidiary of the parent company.

The company expects to invest around Rs six crore in setting up the rolling mill in Mauritius.

Recently, the company has entered into a joint venture (JV) agreement with Mauritius-based SVR International Coal Ltd and formed Steel Profiles (Mauritius) Co with an objective to achieve exclusive and focused steel and coal business operations of the company.

"Our subsidiary company in Mauritius will be instrumental in selling the finished products in Mauritius. Under the JV agreement with SVR International, the company will import the scrap from Mauritius at a cheaper price to meet the raw material requirements of the company. The JV will pave the way for the creation of one of the region's most credible consortium-led steel market place," B Satish Kumar, managing director, SEIL told Business Standard on Wednesday.

As part of the backward integration plan, the company is setting up a gas-fired sponge iron unit at Ravulapalem with a capacity of five lakh tonnes per annum at an investment of around Rs 400 crore.

The company has already acquired Simhadri Steels from a Chennai-based group along with Ongole-based Dattasai Steel as first part of its backward integration plan.

"We will procure gas from GAIL for its sponge iron unit at Ravulapalem. GAIL (India) has agreed to supply five lakh cubic metres per day of gas by the end of 2007, by the time the plant will also become operational," said Kumar.

With gas allocation from GAIL (India) being tied up, the company has set up an induction furnace at its existing unit at Ravulapalem, which will enhance the furnace capacity from 60,000 tonnes per annum to over 90,000 tonnes per annum.

"We will be investing another Rs eight crore to enhance the furnace capacity and the captive power capacity to eight mw from six mw currently," said Kumar.

At present, over 90 per cent of the company's products are consumed in the south Indian markets.

The company has a chain of 24 retail outlets. It posted a net profit of Rs 2.14 crore at a total income of Rs 154.24 crore for the half year ended September 30, 2004, and the company expects better performance by the end of the current fiscal as the commercial production from the Stell Ingot Plant was started in September 2004.