Electrosteel Castings Ltd, primarily a ductile pipe maker, may see higher revenue flow from mining activities than from manufacturing in the next few years.

The profitability of the company in the recent quarters has turned volatile as it is plagued by delays in developing its mining assets and price as well as margin pressures for its manufactured products – pipes and fittings.

More reserves

However, sources close to the company told Business Line that the mining assets, particularly the coal blocks and iron ore deposits, under development could have much higher than estimated reserves.

Mr Umang Kejriwal, Managing Director of Electrosteel, confirmed that the company planned to make all its mining concessions operational in three years. “One mining asset would start production in 2012,” he said. But, Mr Kejriwal declined to detail further.

The company was developing two coking coal blocks and an iron ore mine in Jharkhand. In one coal block having an estimated reserve of 230 million tonnes, Electrosteel has full exploitation rights. In another block it has rights to 50 per cent of the estimated deposits of 600 million tonnes.

Mining sources, however, insisted that the coal block with absolute right would be ready first. “Indications from the recent exploration suggest much higher incidence of coking coal deposits in the licence areas,” a source said. These projects were originally planned to reduce the company's dependence on imports. The company has also set up a 2 million tonnes a year coal washing facility.

The company at present is awaiting the clearance from the Ministry of Environment and Forests. The company is also developing the dolomite mine. Private railway sidings are in the final stage of commissioning and are likely to be operational soon.

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