Vizag Profiles mulls Rs 350cr sponge iron plant

Vizag-based Vizag Profiles Group is planning to set up a Rs 350-crore sponge iron plant to meet the raw material needs of its steel mills.

The company is into steel trading, steel manufacturing, civil construction, real estate, power generation and software business. Vizag Profiles currently operates four steel mills at Vizag, Ongole and Ravulapalem with a combined capacity of 1.55 lakh tonnes.

"We need about 200-250 tonnes of raw material per day to run some of our existing steel mills. Though we are currently depending on Visakhapatnam Steel Plant (VSP) for raw material, we are facing scarcity at times. Besides, we have been paying high prices for the raw materials supplied by VSP. To overcome these problems, we are planning to set up a sponge iron plant on our own," B Suresh Kumar, managing director of Vizag Profiles, told Business Standard.

The Rs 500-crore company may start the construction work of the plant next fiscal.

"We are contemplating setting up a 500-tonne per day capacity sponge iron plant, which would cost us anywhere between Rs 300 crore and Rs 350 crore. We are in the process of going in for tie-ups for iron ore and natural gas supply. Part of the Rs 300-350 crore outlay would be funded through debt and internal accruals. We are also planning to go in for a public issue for this purpose," he said.

The group recently amalgamated its steel trading and software divisions, Simhadri Re-Rolling Mills, and power and ingot units to form a new company "� Steel Exchange India Ltd, which is currently operating under Vizag Profiles Group.

"Our Ravulapalem unit is generating 6 mw of power and is producing 60,000 tonnes of steel ingots per year. We are planning to increase the ingots production capacity by another 20,000 tonnes with an outlay of Rs 10 crore. We also have plans to increase the Simhadri Re-Rolling Mills' capacity by 20 per cent," he said.

Vizag Profiles Group is expecting a 20-25 per cent growth in turnover this fiscal.

"We have achieved a turnover of close to Rs 480 crore last fiscal. Due to the additional production from our mills, we have already touched the Rs 500-crore mark, and we expect to close the current fiscal with a turnover of over Rs 600 crore," he said.