The Hindu Business Line : Chitrakoot setting up steel plant near Chennai

A NEWLY formed company called Chitrakoot Steel and Power Pvt Ltd is setting up a Rs 45-crore sponge iron-cum-steel project in Gummidipoondi industrial estate, near Chennai. Work on the project is expected to start in March.

Mr G. Gautam Reddy, a mechanical engineer who has had industrial training in the US, has promoted the company. Mr Reddy is the CEO of Chitrakoot Steel.

In the first phase of the project, the company will produce 100 tonnes a day of sponge iron, which is a substitute for steel scrap. About 60 per cent of the production would be consumed by an associate company, Viki Industries (P) Ltd, which produces construction steel at its unit in Gummidipoondi. The rest of the sponge iron would be sold to various steel units in Tamil Nadu.

The first phase will consume Rs 15 crore of investment. In the second phase, Chitrakoot indends to add 100 tpd of sponge iron capacity. This phase will cost another Rs 5 crore. The third phase will consist of a 5,000-tonnes-a-month steel plant and a 6 MW power plant. This will cost about Rs 35 crore.

According to Mr Gautam Reddy, it is possible to produce at such low levels of investment because of the cost reduction measures embedded in the project. First of all, the plant would use conventional (imported) coal, instead of the more expensive coking coal. Second, the waste gases from the furnace would be used in a `waste heat recovery boiler' to produce 4.5 MW of power. The furnace residue, char, would be fed into a (fluidised bed combustion) boiler to produce another 1.5 MW of power. The per-unit cost of power would work out to Rs 1.50.

Thus, the plant would have three key raw materials at comparatively lower costs — sponge iron, coal and power.

The project is implemented on a debt-equity mix of 2:1. The debt is funded by Indian Overseas Bank.

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