Steel Exchange India Limited (SEIL) a Vizag-based listed company which is into steel production and steel trading business, is planning to set up a 300,000-tonne tonne capacity iron ore pellets manufacturing unit in Kottavalasa near Visakhapatnam with an investment of Rs 200 crore.
SEI had acquired the 250,000-tonne sponge iron mill of Gold Star Alloy India Limited for about Rs 150 crore two years ago and had converted it into a 300,000-million tonne integrated steel unit. The Board for Industrial and Financial Reconstruction (BIFR) has recently approved the merger of Gold Star Alloy with SEIL.
“Currently, we are producing 8-millimetre (mm) to 32-mm re-bars at the Kottavalasa unit by using iron ore. However, using pellets for making steel products will enrich quality as well as improve our margins. Hence, we have decided to set up the pellatisation plant,” B Suresh Kumar, joint managing director of SEIL, told Business Standard.
Of the Rs 200 crore, the promoters will pump in Rs 50 crore as equity while the remaining will be raised from banks and other financial institutions. SEIL is floating a separate company for the pellets plant, which will commence production in 2014, he said.
SEIL is also setting up a 60-Mw captive power plant with an investment of Rs 315 crore at the existing steel unit in Kottavalasa. Of the 60 Mw, 16 Mw will be generated using waste gases released from the steel mill, while 44 Mw will be generated using coal.
Kumar said that the current power cuts had been impacting the company's production by almost 40 per cent. “Our captive power generation will begin from next month, post which the unit will run with full capacity,” he said, adding that the existing 300,000-tonne capacity will need only 30 Mw, and the remaining will be sent to the power grid to earn additional revenues.
The company reported a turnover of Rs 1,300 crore last year, of which its steel trading business accounted for 40 per cent. However, the company will mainly focus on steel production in future, which will generate more margins, he said.
“We expect our turnover to cross Rs 1,500 crore this financial year,” Kumar said, adding that it was targeting to increase its steel production capacity to one million by 2020.
