With cash in hand of about Rs 5,505 crore at the end of December 2009, Sesa Goa Ltd, a Vedanta Group company, has hinted at expanding at mining capacity ? both through the organic and inorganic routes. In June last year, it acquired a small mining company VS Dempo in Goa, which would add 5 million tonne of mining capacity annually. PK Mukherjee, managing director of Sesa Goa, spoke to Smita Joshi Saha of FE about the company?s expansion plans.

What do you attribute the good numbers in the December quarter to?

The numbers we have achieved in the third quarter are primarily because of the Dempo acquisition we did in June last year.

How was your production and sales in Q3? Were you able to achieve your targeted numbers?

Well, I would have been happier if the numbers had been more than what we have reported. Our production during the third quarter took a beating in Goa because of the extended monsoons till October and November there. In Karnataka and Orissa, there were issues pertaining to illegal mining, forest permits, among others. Our mines are completely legal but no permits were being issued as a result of which we took production cuts of about one million tonne during the quarter.

The company is targeting 50 million tonne capacity in the next 2-3 years. How do you plan to achieve this target?

I will not be able to disclose all the details but there are various parameters which we are working on. We have so far spent about Rs 100 crore (till Dec 2009), and for our 50 million tonne target, we are approximately looking at spending about Rs 1,500 crore. The major challenge for us in achieving our target is logistics.

The company has raised FCCBs worth $500 million in the last quarter. Why was that required when the company has strong cash balances?

Well, no cash is enough for growth. As far as the FCCBs are concerned, it was a good window for us to raise money.

What is your spot and long term mix of sales and would you maintain that target?

In Q3, the mix was 67:33 (67 spot and 33 long term). Whether we would maintain the mix will depend on how things shape up.

What is your outlook for Q4?

Demand is strong and prices will behave accordingly. We expect to deliver a combine (Sesa Goa and Dempo) growth of 20% year-on-year.