After the recent Rs 900-crore Maithan Ispat acquisition, Mesco Steel is eyeing some distressed steel plants as part of its plan to augment capacity to 4.5 million tonne in the next 3-5 years with an investment of Rs 13,500 crore.
The Kalinganagar-based company, delisted from the BSE in 2004, is also planning to get listed again in this calendar year.
The company has 6-7 takeover proposals from the banks for buying debt-ridden assets, which are otherwise good targets for acquisition. Maithan Ispat is located nearby to Mesco’s original plant here.
“Banks are giving us several proposals for acquisition in Odisha. We are currently conducting technical feasibility and will go for one acquisition provided the target comes at a lower price but add synergy to our existing portfolio.
We are ready to take over up to R1,000 crore debts for one such acquisition,” said company’s finance director Natasha Singh Sinha.
The common problem of these targets are not just debt, but they also do not have any mines. Mesco, on the other hand, has two iron ore mines, which would suffice the need for the key steel-making raw material for many years.
Sinha has no apprehension over the demand side as she believes due to low per capita consumption and government’s push to spruce up the beleaguered infrastructure sector, India’s demand is bound to grow and consolidating the position at the current low web would help the company a lot in the medium-term.
Sinha said the company plans to augment steel-making capacity at its original plant at Jajpur to 3.5 MTPA from 1 MTPA now and at the Maithan Ispat facility to 1 MTPA from nil.
She said a definitive pact with Korean major Posco for transfer and installation of a 0.7-MT steel plant from South Korea to Kalinganagar would be signed soon. Posco would have a minority stake in the venture that would use Posco’s patented iron-making technology for the first time outside Korea.
SAIL and Posco had signed an initial pact earlier to use the technology which uses low-grade fines for making steel and replaces expensive coking coal with normal coals. But, it never took over the shareholding tangle in which both the parties wanted to have a majority stake.
However, in their proposed joint venture with Mesco, Posco has agreed to go ahead even with a minority stake.
While Posco’s contribution in the joint venture would be limited to transfer of technology, plant and machinery and some cash in lieu of the minority stake holding; Mesco is in talks with local firms including Tata Power for a 100 MW project and an Italian firm for a 1,000 tonne per day oxygen facility through the joint venture route.