The Hindu Business Line : Mesco Steel to invest $2.8 b in two plants in Orissa

Capex plans
The company would be investing close to $1.2 billion in Mideast Integrated Steels Ltd to enhance the existing pig iron plant into a 3.5-million tonne (mt) steel plant.
The other $1.6 billion would be invested in the other group company Mesco Kalinga Steel Ltd to set up a 3-mt greenfield steel plant.

Phalguna Jandhyala

Recently in Kalinganagar (Orissa), Feb. 5 Mesco Steel plans to invest around $2.8 billion to set up two steel plants — a brownfield expansion and the other a greenfield project — in Jajpur, Orissa.

The company would be investing close to $1.2 billion in Mideast Integrated Steels Ltd (MISL), where it has an 88.5 per cent stake, to enhance the existing pig iron plant into a 3.5-million tonne (mt) steel plant.

“The other $1.6 billion would be invested in the other group company Mesco Kalinga Steel Ltd (MKSL) to set up a 3-mt greenfield steel plant in the first phase, which can be expanded later to 5 mt,” said Ms Rita Singh, Managing Director, Mesco Steel.

She added that the company is in the process of finalising a joint venture partner for the MKSL project and that the discussions are in an advanced stage. “We are likely to finalise the joint venture partner in the next two to three months,” Ms Singh said. MKSL has already acquired around 800 acres for the proposed greenfield project.

According to Ms Singh, both the projects are expected to be commissioned by 2010-11. “The funds would be raised from a mix of debt and equity. While in MISL we expect the debt equity ratio to be around 1.5:1, in MKSL we expect the debt equity ratio to be 2:1,” she said.

“We are also working towards financial strength and have cleared the dues of almost 90 per cent of our secured creditors. Embarking on an aggressive expansion strategy, we intend to ensure that Mesco takes a strong and successful leap in the steel industry,” Ms Singh said.

The company has cleared borrowings to the tune of Rs 340 crore to Industrial Development Bank of India, Industrial Financial Corporation of India, Life Insurance Corporation of India and UTI.

Mesco, which recently became a debt-free company, is also planning to ramp up its pig iron production from 4 lakh tonnes (lt) to 7 lt by 2008-09.

The company, which until now was mining around 4.2 mt of iron ore per year from its merchant mine located at Barbil in Keonjhar district of Orissa, plans to increase it to around 5-6 mt by the end of 2008-09.

“We also expect to get the necessary forest and environment clearances for our second iron mine by the end of the calendar year,” Ms Singh said.

According to Ms Natasha Singh Sinha, Director, Mesco Steel, the second mine has around 240 mt of high grade iron ore reserves. “As part of the long-term strategy of the company, we expect to be able to mine around 30 mt of iron ore in the next five years,” she said.

“MISL will be mainly into manufacturing of long products. But we could also add slabs and billets to the product portfolio. In MKSL, we plan to manufacture both long and flat products,” Ms Sinha added.

More Stories on : Steel | New Projects

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page