November 30, 2003
MD's interview in Steel & Metallurgy
An Interview of Mr. Ashok Pandit, Managing Director, Tata Sponge Iron Limited with the Editor of Steel & Metallurgy, Mr. Nirmalya Mukherjee. (December 2003 issue)
N.M.: As the Managing Director of Tata Sponge Iron Ltd. (Tata Sponge), how do you see the future of the Sponge Iron industry at a time when there are a lot of Sponge Iron Units coming up in the near future? Are we likely to see an excess capacity in the next few years?
A.P.: The future of Sponge Iron Industry is very bright. The primary reasons for the same are the following:
First of all there is a global shortage of scrap. You must understand that the World War II ships are all gone. Since scrap is 100% metallic, the next best alternative is something which is close to scrap, such as sponge iron which is 90% metallic. As such, sponge iron will have to replace scrap both in the short and long run.
Besides, there is also the China factor. Though there is a feeling that beyond 2008, the Chinese steel market will be forced to export steel, I personally feel that this is only speculation. China will remain a net importing country, even after the Olympics are over, so long as it is developing at an economic rate.
So, I can predict that there is unlikely to be an excess sponge iron capacity in the near future.
N.M.: With the severe shortage in availability of gas in our country don’t you think that the gas based Sponge Iron Units are likely to suffer? What is the status of Coal-based units?
A.P.: The price of gas is being subsidized by the Government. When coal is selling at international prices there is no reason as to why gas should not be priced at international levels. I have a strong feeling that sponge iron prices are likely to reach around Rs.10,000/- per ton in the next month. In such a situation, the gas based units may be on a strong footing, but sooner or later the gas sector will be forced to price their output at international levels, and in such a situation the gas based units will become unviable and more and more people will start up coal based units.
N.M.: What was the turnover of Tata Sponge Iron during the year 2002-03 and what is your target for 2003-04?
A.P.: In the year 2002-03 the turnover of Tata Sponge was Rs.145 crore out of which profit after tax was pegged at Rs.18.5 crore.
In the current fiscal year 2003-04 we will end up with an approximate figure of around Rs.180 crore. We have already achieved a profit before tax of approx. Rs.25 crore in the first six months of this fiscal.
N.M.: What are your plans on export front? Could you briefly highlight your current exports both in terms of tonnage and value? Which are the markets in which you intend to concentrate on?
A.P.: We are exporting very little sponge iron to Bangladesh and China is knocking at our doors though we have almost nothing left for exports. 40% of our production is consumed by TISCO and the balance 60% is sold in the neighboring states including Assam, Jharkhand, Chattisgarh, Bihar and West Bengal.
We will concentrate primarily on the Indian market.
N.M.: Do you have any further expansion and consolidation plans in the near future?
A.P.: We are going in for a third kiln of 500 tpd capacity and two power plants with a total of 17.5 MW. We are already producing 7.5 MW of power.
The total project cost would be Rs. 140 crore for which we are approaching the Banks and Financial Institutions who have shown keen interest to provide us funds at very reasonable rates of only 7.5%.
Our future plan is to go in for new technology and a fluidized bed boiler power plant using coal fines and waste char to produce 20 MW of power.
N.M.: What is the present employee strength of your plant at Joda? Do you have any downsizing plans in the year future?
A.P.: We have around 400 employees out which 300 are workers and about 100 officers. There is no question of downsizing since our labour cost is only 4.5 per cent of our revenue where as for many others it is about 7 to 8 percent. In fact, we have to go in for further recruitments, since our plant’s expansion is presently on the cards.
N.M.: As a Managing Director of Tata Sponge Iron Ltd. What is your vision for the company by the 2020?
A.P.: By the year 2020, Tata Sponge hopes to become a thriving sponge iron, power and steel producing company.