Tata Sponge to invest Rs 800 cr in Orissa

Tata Sponge Iron has lined up an investment of Rs 800 crore for capacity expansion at the existing premises at Bilaipada near Joda, in the Keonjhar district of Orissa.

Ashok Pandit, managing director of Tata Sponge, said the board has given an in-principle approval for setting up three kilns and three additional power plants and this would be done in phases.

This would take the capacity of the plant to 8.4 lakh tonne per annum, an increase of 115 per cent.

The total investment would be to the tune of Rs 800 crore, out of which, 25 per cent would funded through internal accruals and the balance would be debt funded.

"We are not looking at equity funding" said Pandit.

The kilns would be put up at a gap of one year but everything would depend on the market situation.

He said the gap could be brought down to six months also.

At present, the board has approved an investment of Rs 300 crore for installation of the fourth kiln of 1.5 lakh tonne per annum capacity and a captive power generational facility of 18.5 megawatt (Mw) capacity along with other related facilities.

After the first phase of expansion, the installed sponge iron manufacturing capacity of the company would increase from 3.9 lakh tonne per annum to 5.4 lakh tonne per annum.

Out of this, 1.5 lakh tonne per annum was currently under implementation.

The capacity expansion was part of a growth plan to enhance the sponge iron manufacturing capacity to 8.4 lakh tonne in a phased manner.

Further, the captive power generation facility would increase to 44.5 Mw, including the captive power plant of 18.5 Mw currently under implementation.

The plant was initially designed for a production capacity of 90,000 tonne per annum which was enhanced to 1,20,000 tonne per annum through various modifications during 1990-91.

Later, to cater to the growing demand of quality sponge iron, Tata Sponge doubled its capacity by adding another kiln of equivalent capacity in 1998-99.

In December, 2001 Tata Sponge commissioned a 7.5 MW captive power plant to produce electricity from the waste heat of exit gases of its second kiln.

Tata Sponge was incorporated in 1982 as a joint venture of Tata Steel and the Industrial Promotion & Investment Corporation of Orissa Limited (IPICOL).

It was set up for the production of sponge iron based on the Tisco direct reduction (TDR) technology.

Later during 1991, Tata Steel acquired IPICOL's stake and at present Tata Sponge is a sister company of Tata Steel.