TSIL prowling for sponge iron plants

Tata group company Tata Sponge Iron Ltd or TSIL is on the prowl and is looking for acquiring sponge iron plants. Taking advantage of the Orissa government''s encouragement to steel manufacturing plants through incentives like the acquisition of iron ore mines, the company is going in for forward integration to convert a part of the sponge iron it makes to steel through the electric steel making route and also to sell power made from the heat of kiln waste gases.

TSIL 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, TSIL is considering ultimately producing upto 2 million tonnes per annum of steel with sponge iron and scrap as its basic raw materials. To do so, the company will first increase its DRI (direct reduction iron) production capacity from 240,000 tonnes at present and simultaneously add power generation facilities of upto 47.5mw 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.

TSIL officials said, "Currently, we are exploring the possibility to take over companies that are in the red and are incurring losses or have defaulted on their debt repayment to institutions. We intend to take over these non-performing assets from the institutions or from asset reconstruction companies."

TSIL ''s growth in installed capacity will come partly through such acquisitions. The company is scouting for plants with manufacturing capacity of 300 tons per day at the least, for that was the economical size. TSIL will also expand the sponge iron manufacturing capacity of its plant by installing a third kiln for around Rs70 crore.

This expansion will see the plant capacity increase by 62 per cent to 390,000 ton a year from 240,000 tonnes and will help the company to further consolidate its position as the largest supplier of quality sponge iron in east India and the second largest coal-based sponge iron plant in India.