The Hindu Business Line : ISMT plans increasing tube capacity at Baramati plant

Mumbai, Sept. 30 Pune-based seamless tube maker ISMT Ltd is in the process of tripling its tube capacity from 1,55,000 tonnes per annum (tpa) to 475,000 tpa at its Baramati plant at a cost of Rs 260 crore.

ISMT is a diversified and integrated manufacturer of seamless tubes. Besides Baramati, the company has plants at Jejuri and Ahmednagar.

It supplies steel for bearing, automotive, mining and energy (pressure and boiler tubes) segments and is also into expanding its steel making capacity from 2,50,000 tonnes to 5,00,000 tonnes.

The Baramati expansion will essentially be at zero cost for the company as the Maharashtra Government has accorded ‘mega project’ status to the capacity enhancement programme, which provides it State concessions including a seven-year tax holiday. Moreover, the company has resorted to a process change regarding tubing by doing away with ‘reduction’ (shrinking of tube to size), which officials say would effect a substantial cost reduction in operations.

ISMT Chief Financial Officer, Mr Rajiv Goel, told Business Line that this would bring down operating cost and result in an Rs 100-crore annualised savings. “With the tax holiday and the cost reduction in process, the project cost recovery would be over in two years,” he said.

Acquisition

The company has recently completed the formalities relating to acquisition of the 300-year-old Swedish company Structo Hydraulics AB, which makes hydraulic cylinder tubes. Structo enterprise value has been pegged at Rs 50 crore. Its product range includes cold drawn seamless tubes, welded tubes and roller burnished cylinder tubes. The company is expected to give ISMT access to European markets, as also the wherewithal to replicate its operations in India.

“It will be a forward integration process, Structo is operating at about 60 per cent capacity and we intend stepping it up,” said Mr Devang C. Shah, Assistant Vice–President of Finance, ISMT.

More Stories on : Outlook | Steel | Maharashtra

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