The Hindu Business Line : Rohit Ferro Tech spurts on expansion plans

Kolkata, May 28 Rohit Ferro Tech Ltd appears to be on fire at the bourses after several recent announcements regarding business expansion. The stock on Wednesday finished at Rs 184.05 on the BSE, representing 80 per cent price appreciation in one month and grossed a traded quantity of 7.31-lakh shares against the fortnightly average of 4.81-lakh shares.

In the past one week, the stock moved up by 19 per cent. This BSE SmallCap index component has attracted market’s attention after it made some major announcements, which have direct bearing on its future earnings. A few brokerages, including Religare, have initiated coverage and noted the company’s outlook as positive.

Global demand

According to Mr Rajesh Agarwal of CD Equisearch, the outlook of local ferro alloy industry is positive for the next few years, owing to high global demand, acute power shortage in South Africa and imposition of export duty by China.

Billed as one of the country’s largest ferro alloy producers, with a capacity of 18 lakh tpa, the company has been riding ferro chrome supply crunch “witnessing a sharp increase in profit per tonne,” said a recent Religare note. Apart from commissioning an 1.1 lakh tpa ferro crome pant in Orissa and a proposal to set up an additional 50,000 tpa ferro alloy plant with a power plant for Rs 515 crore, it has also announced diversification of product portfolio by converting chrome alloy to manganese alloy and setting up a new 1 lakh tpa plant in West Bengal for silico-manganese, ferro-manganese and ferro silicon at cost of around Rs 250 crore.

Supply agreement

The company has bought 40 acres of land in Haldia, in West Bengal, for setting up a ferro alloy plant. RFTL has planned this plant with six 9 MVA furnaces. It has also entered into a long-term agreement with West Bengal State Electricity Board for power supply at a 25 per cent subsidised rate.

In its pursuit of raw material security, RFTL has recently entered into an MoU with PSP Group (PT Pacific Samudra Perkasa) of Indonesia to acquire 60 per cent economic interest in two coal mining companies in Indonesia through its newly-incorporated wholly owned subsidiary in Singapore named SKP Overseas Pte Ltd. The company currently imports coke and chrome ores.

According to Mr Agarwal, RFTL is expected to report 157 per cent increase in sales in 2008-10 period with higher operating and net profit margins.

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