Vizag Steel posts Rs 8,469cr turnover

Visakhapatnam Steel Plant (VSP) achieved a sales turnover of Rs 8,469 crore in the financial year ended March 31, 2006, as compared to Rs 8,181 crore in 2004-05, reflecting a growth of 4 per cent. Of the total sales turnover, exports accounted for Rs 443 crore, a growth of 78 per cent.

Addressing mediapersons here on Tuesday, Vizag Steel chairman and managing director Y Siva Sagar Rao said the steel plant posted Rs 8,469-crore turnover in 2005-06 despite a steep hike in raw material prices and fall in steel prices that impacted its margins.

"The company paid an additional amount of about Rs 450 crore for raw materials in 2005-06 due to the increase in several raw material costs. This apart, the steel prices dipped 23 per cent in 2005-06. Owing to this, we expect a 40 per cent drop in net margins during this year," he said.

VSP's net profit was Rs 2,008 crore in 2004-05. The company was expecting a lower net profit of Rs 1,200 crore in the just concluded fiscal and Rs 1,000 crore in 2006-07, he added.

Rao said VSP was making serious efforts to acquire coking coal blocks and captive iron ore mines for assured supply of raw material and to cut down substantially on costs. "Once we acquire the captive mines, our raw material costs will come down drastically and the company will save around Rs 500 crore a year on purchase of raw material," he said.

In 2005-06, VSP produced 4.15 million tonnes of hot metal, 3.60 million tonnes of liquid steel and 3.23 million tonnes of saleable steel, registering a growth of 6 per cent, 1 per cent, and 2 per cent respectively.

Almost all the production units at the steel plant achieved capacity utilisation of over 120 per cent, he said. VSP sold 9.27 lakh tonnes of value-added steel in 2005-06, a growth of 5 per cent as compared to last year. This is the company's best performance in value-added steel sales since its inception, he added.

The company is exploring new overseas markets besides setting up new sales depots abroad to enhance exports.

"VSP and the National Mineral Development Corporation are jointly setting up a pellets plant at Bailadilla, and the government has recently sanctioned a coal block to VSP. The steel plant will invest Rs 100 crore during 2006-07 in these two projects," Rao said.

"We have already started the Rs 8,692-crore expansion works at the plant. In the current financial year, we will be spending around Rs 1,000 crore on the project which will be ready in 36 months," he added.

VSP currently uses Visakhapatnam port for importing raw material and exporting steel products. "Once the Gangavaram port is ready, we will shift to the new port, which is nearer to the steel plant. This will help VSP save around Rs 30 crore a year on freight charges, he said.