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Our Bureau

For setting up integrated steel plant in Jharkhand

Kolkata May 7 The board of Electrosteel Castings Ltd, at its meeting here on Monday, has cleared the proposal to invest up to Rs 500 crore in the equity of Electrosteel Integrated Ltd, an associate company, for setting up a 1.3-mtpa integrated steel plant in Jharkhand. The project will include manufacture of ductile iron (DI) Pipes as well.

According to informed sources, the equity component of the nearly Rs 5,000-crore project is said to be around Rs 1,239 crore, out of which ECL's share is expected to be Rs 500 crore, some 40 per cent. All this is, however, subject to financial closure.

According to senior company officials, such equity investment would be in a phased manner over a period of two-and-half years.

Offsetting cost

In a bid to offset the rise in cost of iron ore, a major input for manufacture of DI Pipes, ECL is installing a sinter plant, which will use iron ore fines instead of the costly lump ore, helping to contain raw material costs. The commissioning of the plant is expected by December.

ECL has already received allocation of Parbatpur Coal Block in Jharia coalfield area for mining of coal for captive consumption.

Officials said other related infrastructure works are in progress. The benefit of the captive mine is expected to accrue from 2008-09.

During the year, the company has successfully implemented the stamp charging system at its Coke Oven Plant for producing metallurgical coke at lower cost. The company has also been allotted an iron ore mine in Kodolibad, Jharkhand and infrastructure facilities are being developed. It is learnt that the backward integration measure will reduce the operating cost and ensure a steady supply of ore for ECL.

It may be mentioned that in order to finance the coalmines and sinter projects, ECL, during 2006-07, successfully raised $75 million through issue of zero coupon foreign currency convertible bonds.

Results

Electrosteel Castings Ltd, for the year ended March 31, 2007, has recorded a jump in profit after tax at Rs 106.15 crore, up from the Rs 76.44 crore during 2005-06. The fourth quarter PAT, however, has recorded a drop at Rs 28.21 crore (Rs 30.44 crore). Gross earnings in 2006-07 have increased to Rs 1,184.34 crore (Rs 1,001.69 crore).

According to an official release by ECL here on Monday, the EBIDTA has shot up by 31 per cent from Rs 162.11 crore in 2005-06 to Rs 212.67 crore in 2006-07. PBT for the period under review has shot up by 47 per cent from Rs 107.87 crore in 2005-06 to Rs 158.42 crore in 2006-07. The above results were taken on record by the board at its meeting here on Monday.

The 34-per-cent increase in exports of DI pipes and fittings by ECL during 2006-07, from Rs 334.56 crore (2005-06) to Rs 447.05 crore, is attributed to aggressive marketing efforts by the company in the competitive markets of Europe, Singapore and West Asia.

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