To take SPV route; in talks with States for iron ore mine leases

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Turnaround plan

As part

of its strategy to facilitate a turnaround, Ispat Industries was looking at expanding the steel making capacity at its Dolvi plant to beyond the existing level of 3.6 million tonnes.

Kolkata, Aug. 29

Ispat Industries Ltd has decided to take the Special Purpose Vehicle (SPV) route to set up a three-million-tonne per annum capacity pelletisation plant in Vizag.

Details of investments and other technical issues were being looked into, Mr Pramod Mittal, Chairman of Ispat Industries Ltd, told newspersons at the conclusion of the company's 21st annual general meeting held here on Tuesday.

"Ispat Industries will be one of the sponsors of the proposed pelletisation plant," Mr Mittal said, adding that the structure of the proposed entity under which the pelletisation plant would be set up was yet to be finalised. The investment required for setting up the proposed plant would be firmed up after the detailed engineering study is completed. The plant will commence production two-and-a-half years from zero date. Raw material linkages, however, has been firmed up.

According to Mr Mittal, the company has approached a few state governments with requests for iron ore mining leases. As part of its strategy to facilitate a turnaround, Ispat Industries was looking at expanding the steel making capacity at its Dolvi plant to beyond the existing level of 3.6 million tonnes. It was also open to the idea of setting up greenfield ventures closer to raw material sources. It was also focusing on security for sourcing key steel making consumables like ferro alloys, refractories, magnesite, steel rolls, etc.

In the year ended March 31, 2006, Ispat Industries notched a total income of Rs 5,010.73 crore compared with Rs 6,112.89 crore the previous year. The company registered a net loss of Rs 812.67 crore in 2005-06 against a net profit of Rs 696.06 crore in 2004-05.

Mr Mittal refused to hazard a guess on how much time the company would take to wipe out its losses. All he said was that it was "redeeming" that the conditions in the global steel scenario were on the upswing since the beginning of the current fiscal.

(This article was published in the Business Line print edition dated August 30, 2006)
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