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Visa Steel to invest Rs 2k cr over 2-3 years
8/27/2008 |
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Visa Steel, one of the youngest domestic steel companies, has lined up a Rs 2,000 crore expansion over the next two to three years.
The company is setting up a steel melting shop and a rolling mill of half a million tonne capacity each. These will be commissioned in 2010. Meanwhile, while most of its expansion plans are in Kalinganagar, Orissa, the company will set up a 2.5 million steel plant (in two stages) in Raigarh.
Meanwhile, the one-lakh tonne ferro chrome plant, that is to come up in Kalinganagar with Bao Steel, is expected to be commissioned in March 2010. Vishal Agarwal, managing director, Visa Steel, said investments will be higher on a 5-year time frame. "We have healthy cash accruals to allow investments at the rate of Rs 1,000 crore per year," he added.
Visa Steel, which also produces coke and ferrochrome, stands to benefit from China's proposal to raise tax on coke exports from 15% to 25%. Visa consumes a third of its own coke and sells the rest.
"Strong Chinese domestic demand and constrained coking coal availability has raised coke free-on-board prices. Considering cost, insurance and freight charges, coke prices have gone up from $750 to $850 per tonne. This would definitely have a positive impact on the company's revenues," Agarwal said.
Visa Steel sells around 2.4 lakh tonnes of coke per annum. Moreover, global ferrochrome prices are expected to rule firm.
"On the global supply side, South Africa accounts for almost 40% of the global ferrochrome production. Eskom, the power distribution company of South Africa, is able to supply only 90% of the power requirement of ferrochrome producers. This has resulted in a 4% reduction in global supply. While new power generating capacity in South Africa may take some time to come up, global prices of ferrochrome are expected to remain firm," Agarwal explained.
Visa Steel's existing facilities include a 50,000 tpa (tonnes per annum) ferrochrome plant, a coke oven plant with a capacity of 4 lakh tpa, a 2.25 lakh tpa pig iron plant and chrome ore beneficiation and grinding plants of 1 lakh tonne each. |
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