Essar Steel India Limited has recorded a significant 48 percent quarter-on-quarter growth in flat steel production in the first quarter of the current fiscal.
The total production stood at 1.22 million tonnes compared to 0.824 million tonnes in the corresponding period last year. Pellet production also grew by 58 percent to 2.02 million tonnes compared to 1.28 million tonnes in the same quarter last year.
At 78 KT, Essar Steel PPGI (Pre Painted Galvanized Iron) production was the highest ever in a quarter up by 55 percent when compared to 50 KT produced in the corresponding period last year.
With the ramp up in production volumes since March 2016, there has been a significant growth in the company's EBITDA margin and a marked improvement in the debt-equity ratio. The EBITDA margin has increased from 5 percent to around 20 percent, which translates to an improvement to Rs. 6,000 to Rs. 7,000 per tonne.
EStIL's production ramp-up and its positive impact on the financials has been complemented by the introduction of MIP (Minimum Import Price) and BIS standards. Following these measures by the Government of India, Chinese imports of steel at predatory prices has been contained, leading to better sales realization in the Indian market.
With the availability of its iron ore mines that were recently acquired and full production at the Pellet Plant, Essar is poised to maintain production at high levels.
