May 24, 2004
Tata Sponge Steeling its Future
Tata Sponge Steeling its Future with a Rs.1000+ Crore Investment in Orissa.
Bhubaneswar: the state government has now been encouraging the installation of steel manufacturing plants in the state through incentives like the acquisition of iron ore mines, etc. on priority basis. This has encouraged Tata Sponge Iron Ltd (Tata Sponge) to go for forward integration to convert a part of the sponge iron it makes to steel through the electric steelmaking route and also to sell power made from the sensible heat of kiln waste gases. Tata Sponge also plans backward integration to acquire iron ore mines and coal blocks considered very necessary for the expansion programme.
As per the growth strategy formulated by the company, Tata Sponge is considering to ultimately produce upto 2 million tonne per annum of steel with sponge iron and scrap as its basic raw materials. For this purpose, the company will first increase its merchant DRI production capacity from the present 240,000 tonnes to 840,000 tonnes and simultaneously add power generation facilities of upto 47.5 MW by recovering the waste heat of the kilns in the first phase of its expansion programme. This will help the company to exploit the existing buoyant demand for DRI in the country while selling power to other industries. In the second phase, the company plans to generate additional power of upto 50 MW by putting up a fluidized bed boiler based power plant and then install electric arc furnaces to produce steel. In the meanwhile, the company would like to acquire its own iron ore mines and a coal block to become self sufficient in the critical supply of raw materials.
Mr.Ashok Pandit, the MD of Tata Sponge stated that company’s new steel plant in Keonjhar will contribute to the government exchequer additional revenues on successful commissioning of its projects, besides generating employment opportunities. All things being equal, he declared that people from the state of Orissa in general and from Keonjhar in particular will be given preference in the filling of all future vacancies provided they possess the requisite qualification and experience to do the necessary jobs.
Mr.Pandit informed that Tata Sponge has been consistently making profits for the past 12 years and paying rich dividends to its shareholders – the last dividend to be paid for the year 2003-04 is 50%. As per the audited accounts of Tata Sponge for the year 2003-04, Tata Sponge paid a total tax of Rs.52 crore during 2003-04. A zero debt and an EVA positive company (EVA for the year ended 31st March 04 is 21), Tata Sponge has strengthened its financial base with a net worth of Rs.83 crores. Company’s EPS as on 31st March ’04 was recorded at an impressive Rs.22.31 per share, which has reflected positively on its share price which has been ruling at over Rs.100 per share.