August 25, 2003
Tata Sponge to Invest in Orissa
Tata Sponge Awaits Policy Change in Orissa for Expansion worth Rs 75 Crores.
Tata Sponge Iron plans to embark on a massive expansion plan. The company is looking forward to a change in the energy policy of Orissa to invest Rs 75 Crores in the co-generation of power.
“With the new Central Electricity Act (CEA) 2003 in place, we hope that the state government will change its power policy to encourage co-generation”, company managing director told FE. He said that if the government and Orissa Electricity Regulatory Commission (OERC) allow third party sale of co-generated power. Tata Sponge Iron will be able to generate another 17.5 MW from its waste steam.
Tata Sponge Iron generates 7.5 MW from the waste steams of its kiln-2. As the OERC has restrained the captive power plants from selling power to existing customers of the retail distribution companies, the company has worked out a power banking mechanism with Nesco. Going by this arrangement, Tata Sponge Iron will supply the surplus to the distribution company grid and will draw power from the Nesco grid when required.
Mr. Pandit said Tata Sponge Iron is also exploring the possibility of selling surplus power to new industries that will come up in the nearby areas. According to him several entrepreneurs have been speaking to the company for sourcing power.
Emboldened by the sponge iron market sentiment in recent months, the company is rushing ahead with its expansion plans. It is now pushing through the environmental clearance for the expansion project. The company proposed to expand capacity to 3.9 lakh tonne per annum (tpa) by adding another kiln and two co-generation facilities with an investment of Rs 150 crore. A 10 MW plant will linked to the waste steam of kiln 3, while a 7.5 MW plant will be linked to kiln 1.
The company, which is sourcing the raw material from Tisco and various subsidiaries of Coal India Ltd, has applied to the state government for iron ore and coal mines.
With sponge iron prices hovering around Rs 9,500 per tonne, Tata Sponge Iron is making a killing in the market. The company notched a profit of Rs 18 crore on a turnover of Rs 171 crore in 2002-03. The scrip is also doing well on the bourses.
The share prices have shot up to Rs 91 in August 2003, from Rs 19.5 a year ago.
Tata Sponge Iron has invested 145 crore in the state and has an installed capacity of 2.4 lakh tpa, besides a 7.5 MW co-generation power plant.
The Tata Sponge MD along with Tisco’s chief representative Sanjaya Patniak told the media that Orissa has build up 13 lakh tones of capacity, while the nations total capacity is 99 lakh tones.
However, the capacity in the state will go up to 54 lakh tonnes, which will be roughly be around 50 percent of the total installed capacity of sponge iron in the country by 2005.
He further said that around 26 new sponge iron plants are coming up in the state.