Ferro Alloys to invest Rs 2,750 cr in steel plant

Mumbai: Ferro Alloys Corporation Ltd (FACOR) has lined up Rs 2,750 crore for capital expenditure that involves setting up a stainless steel plant and a power facility.

FACOR, which produces ferro alloys — a key input for the steel industry, will be setting up a 50,000 tonne Greenfield stainless steel plant in Nagpur. The company plans to set up the project through a joint venture with an European stainless steel producer.

Agreement soon

Mr R.K. Saraf, FACOR chairman and managing director, said the company was in talks with an European steel producer and an agreement was likely to be concluded within the next three months. Apart from supplying technology, the JV partner will also hold some stake in the entity.

He said the steel project, which was estimated to cost Rs 1,000 crore, would be funded through a debt-equity mix, with the equity portion being about Rs 700 crore. Part of this will be raised through its internal accruals, while the foreign partner will put in its share.

The company currently operates a 50,000 tonne steel plant at Nagpur, which produces carbon steel, manganese steel, alloy steel and stainless steel. It also operates a 50,000 tonne charge chrome plant at Bhadrak in Orissa.

Coal-based power plant

In addition to this, FACOR has finalised plans to set up a 250 MW coal-based power plant that involves an investment of Rs 1,500 crore. Both the steel and power units are likely to be completed by 2011.

“We have already started setting up a 45 MW coal-based captive power plant, which will be operational by September this year. This project involves an investment of Rs 250 crore,” Mr Saraf said.

He was positive about the domestic ferro alloys market, especially as the Indian steel sector was ramping up production. He however felt that availability of ferro ore, a critical input for the industry, could pose a concern. He shared the industry’s sentiment that export of the ore should be banned.

In 2004, the FACOR group had de-merged into three companies — FACOR, Facor Steel Ltd and Facor Alloys Ltd.

Net profit up

The company clocked a net profit of Rs 31.41 crore in the third quarter of the current fiscal, against Rs 8.47 crore in the corresponding quarter of last fiscal. Its turnover during the quarter was Rs 249.49 crore (Rs 215.94 crore). It announced an interim dividend of 15 per cent to its shareholders.