The Hindu Business Line : MSPL setting up steel plant at Hospet

Looking ahead
The company is looking at investing Rs 4,300 crore in the first phase.
It is still awaitng clearances for the second phase of the plant.
The company is also looking at tapping the capital market for its mining business.

Ambarish Mukherjee
Phalguna Jandhyala

New Delhi, July 8 MSPL Ltd, the flagship company of the Baldota Group and a leading private sector company in iron ore mining and exports, is in the process of setting up a 2.5-million-tonne (mt) integrated steel plant at Hospet in Karnataka under the name of its group company Aaress Iron and Steel Ltd.

“The steel plant is basically a forward integration of the existing businesses of the company. In the first phase we are looking at setting up a facility to produce 1 mt of special steel, which would basically be automotive alloys. We expect to start production by September 2009,” Mr Rahul N. Baldota, Executive Director, MSPL Ltd, told Business Line.

Another 1.5 mt would be added by 2010, which would produce hot rolled flat products. The company is looking at investing Rs 4,300 crore in the first phase, which would be raised from internal accruals, Mr Baldota said.

Second phase

“To complete the second phase we would require another Rs 4,000 crore but it is too premature to contemplate on how the funds would be generated for this purpose. The overall plan is to have a facility of 5 mt by end of 2013,” he said.

Though the company has got the requisite clearances for setting up the 2.5-mt steel plant, it is still waiting to get the nod for the next phase when it wants to increase the plant capacity.

“MSPL and the steel company would be two different entities. We may not even use our own ore and may approach other ore extraction companies for raw material to our steel plant. We are against steel companies having their own iron ore mines,” Mr Baldota added.

The company is also looking at tapping the capital market for its mining business. Earlier, the group had planned to go in for IPO in December last year for which it had filed the draft red herring prospectus with the Securities Exchange Board of India. However, due to then prevailing market conditions it decided against the proposed initial public offering.

“We will take a final call on entering the market in next two or three months,” he said.

Related Stories:
MSPL's steel plant to be ready in 2009