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Visa Steel sees sales doubling in 2 years
Kolkata: Visa Steel, part of the Rs 5,000 crore Visa Group and a producer of pig iron, LAM coke, ferrochrome sponge iron and power, registered a robust financial performance in the last fiscal with a revenue growth of 12.59% to Rs 1,171.48 crore over the previous fiscal. Ebidta rose 635.15% to Rs 197.63 crore. The net profit during the last fiscal stood at Rs 47.42 crore compared to a loss of Rs 66.81 crore during FY2008-09. It is nearing completion of its special steel plant a Kalinganangar in Orissa and is also close to
financial closure of its joint venture with Baosteel. Vishal Agarwal, managing director, Visa Steel (pictured, right), spoke to
Nandini Goswami on the developments and plans of the company. Excerpts from the interview:
Visa Steel has posted good numbers in 2009-10 and the fourth quarter, what do you attribute this to?
During Q4, the growth in revenue has been 40.25% to Rs 407.28 crore and PAT has increased to Rs 16.51 crore compared to a loss of Rs 110.68 crore during the fourth quarter of 2008-09. Our topline in 2009-10 has grown well and this has been on account of higher production volumes across all operating units. Our hot metal production has increased by 76% to 1,50,423 mt during the year. Ferrochrome and sponge iron production increased by 93% and 391%, respectively during the year. Even LAM coke production increased by 7% during the last one year. Our operating margins increased by 17%, there was better operational efficiency in terms of lower prices of raw materials during the year.
When do you plan to commission your Kalinganagar special steel plant and what kind of investments have you made till now?
We are setting up a 0.5 million tonnes per annum (MTPA) special steel melt shop, 0.5 MTPA special steel bar and wire rod mill and a 25 mw power plant to complete the integrated facility of special steel making in Orissa. We are slated to complete this by the third quarter of 2010-11. Once this is done, this will also complete the capex of around Rs 2,000 crore. Till March 2010 we have invested Rs 1,500 crore, while another Rs 500 crore will be invested this year to complete the entire project.
How much revenues are you expecting from your existing production of ferrochrome and coke apart from pig iron and sponge iron?
Currently, we are selling about 50,000 tonnes ferrochrome and we should be doing revenues of around Rs 300 crore. Coke at current prices should rake in around Rs 500 crore. Once pig iron and sponge iron production is converted into special steel, this should fetch us a revenue of around 1,500 crore. We would get a partial effect of this in the current year and much also depends on steel prices. The full year impact of the conversion and higher revenue will be reflected in 2011-12.
How much revenue do you expect after all this?
Well I could say in the next two years we would be doubling our revenues from Rs 1,170 crore at present to Rs 2,300 crore in FY11-12.
Do you have any further plans in Orissa as problems of sourcing iron ore has become a challenge in the state?
In fact, we are thinking of setting up a sinter and rolling mill in Orissa apart from adding power generation facilities. This is on the drawing board stage and will not be taken forward before the current Kalinganagar plant is commissioned. It would be from April 2011 that we would be thinking in terms of setting up a sinter plant. This would help us in ensuring iron ore supply and stable production from the blast furnace. The problems of iron ore sourcing were acute in February-May, which has affected the sponge iron-ore production and the blast furnace. The decision to go in for a sinter plant is to derisk the iron ore problem. We will be thinking in terms of a half-a-million-tonne capacity for the sinter plant. Investment would be around Rs 100 crore. We are also planning to add a lime kiln.
What about additional power facilities?
We plan to scale up our power generation in Orissa from to 325 mw from 50 mw at present to take care of our power needs for the additional steel manufacturing capacity during the first and second phases of expansion and also to feed the proposed 1 lakh tonne ferrochrome plant with Visa Bao — the joint venture with Baosteel, China. The investment is estimated to be in the range of Rs 1,500 crore. Part of the surplus power could be sold to the grid.
Have you achieved the financial closure for Visa Bao?
The financial closure is expected by the end of the next month. A 100,000 tpa ferrochrome plant is being set up. Visa Steel holds 65% and Baosteel Resources China holds 35%. The entire equity from the promoters to the extent of Rs 91 crore has been infused. The total capex is Rs 260 crore and the debt equity ratio is at 70:30. We have appointed Punjab National Bank for the syndication of the loan. Production from the ferrochrome plant is expected by December 2011.
Your plans outside Orissa…
We have signed an MoU with the Chhattisgarh government for a 2.5 million tonne capacity plant. First we plan to set up a 1 million tonne steel plant in Raigarh. About 250 acres of land has been acquired and the public hearing has also been completed. In Jharkhand we have given a proposal to the government.
Sourced from www.dnaindia.com
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