Timely execution of projects is the key

Font Size

Print

Feedback

Email

Discuss

: Fiscal 2006-2007 saw consolidation in the global steel industry. Big-ticket acquisitions became the buzzword. However, that does not mean small players should not aspire to achieve size.

Ankit Metal and Power Ltd (AMP) was promoted by Suresh Kumar Patni in 2002 to set up an integrated steel plant to manufacture sponge iron, ingots/billets, and re-rolled products with a captive power plant. The project is based in West Bengal.

The sponge iron unit has an installed capacity of 1.05 lakh tpa and has been in operation since October 2005. The billet casting unit has an installed capacity 65,140 mtpa and started operations in January 2006.

The company proposes to install a 1 lakh mtpa capacity rolling mill to produce TMT bars, wire rods and other rolled products out of the billets produced from its steel melting shop, which produces 65,140 mt of billets per year. The rolling mill is expected to go on stream by July 2007.

AMP will use the waste gases generated out of its 350 tpd rotary kiln to produce 8.5 mw of power. This power shall be used in the sponge iron, induction furnaces and rolling mill division. Captive generation is expected to commission by July 2007.

In the last phase, AMP intends to set up another captive power plant to generate 4 mw of power from the AFBC-based power plant by using the charcoal generated from the rotary kiln along with the low-grade coal. This captively produced power will be used to meet the requirements of the company.

AMP has reported revenue of Rs 214.99 crore and net profit of Rs 10.54 crore in FY 2006-2007. Out of the total revenue, Rs 124 crore was contributed by trading revenues. The sponge iron division and ingots-billets unit saw capacity utilisation of 41.39% and 61.46% respectively for FY2006-2007.

Sponge iron prices are expected to remain strong in the near term. Rolled products like TMT bars are expected to remain in good demand with better margins.

However, investors must give due weightage to the challenges arising out of consolidation in the industry. The company’s success depends on timely execution of the projects and achieving the normal capacity utilisation levels on a consistent basis and maintaining costs at lower levels.

Promoters have already subscribed to 20.75 lakh shares out of the total issue at the upper end of the price band.