Speciality Steel and Wire Rope manufacturer Usha Matrin Ltd?s board on Monday decided to earmark Rs 1200 crore more for capital expenditure, beyond the Rs 2100 crore capex already planned. It registered a profit after tax (PAT) of Rs 168.62 crore on a net sales of Rs 2,514.41 crore for the year ended March 31, 2010 against a PAT of Rs 185.34 crore on a net sales of Rs 2949.84 crore for year ended March 31,2009.
While sales were down by 14.8%, PAT was down by 9%. Prashant Jhawar, vice president, said the company?s performance started improving from the fourth quarter of 2009-2010 when most of the projects — 30mw captive power plant, Bar Mill, DRI plant, coal mine, steel plant ? all of which were a part of the Rs 2100 crore capex, became operational.
?Our entire Rs 2100 crore capex programme will be completed once we commission our blast furnace in another 5-6 weeks from now and sinter plant in July,? Jhawar said.
He said the company has already created a capacity of producing 1mt of steel from its integrated steel plant in Jamshedpur but it would take up its production to 650,000 tonne from 350,000 tonne this fiscal, then to 800,000 tonne in 2011-2012 and then look whether to ramp up production to 1 million tonne. ?By that time we expect our additional investment of Rs 1200 crore to be completed, which would mainly aim at reducing our cost of production,? Jhawar said.
P Bhattacharya, joint managing director, said the additional investment would be used to create a 0.4 mt per annum coke oven plant as well as a 30mw captive power plant appended to it, a one lakh tonne per annum DRI plant, which will also have another 30mw power plant appended, a 0.6 mt of pellet plant and a 600 tonne per day iron ore beneficiation plant. The 1200 crore capex would also include development of captive iron ore and coalmines, Bhattacharya said.
The company?s decision to take up finished steel production to 1 mt would depend on the market condition but the additional investment would help Usha Martin to reduce cost of producing steel by Rs 3500 per tonne, Bhattacharya said.
According to Jhawar, the company?s primary aim would be to make captive consumption of the entire steel it would make for wire rope manufacturing and other value added products while also expanding and diversifying the value added product basket.
In 2010-2011, the company?s value added products would account for 35% of the total finished steel produced, AK Somani, president and chief financial officer, said.
Usha Martin, for the fourth quarter of 2009-2010, reported a PAT of Rs 69.20 crore on a net sales of Rs 644.46 crore against a PAT of Rs 28.83 crore on a net sales of Rs 706.45 crore during the corresponding period last fiscal. The increase in PAT was mainly due to operational efficiencies achieved in the last quarter as well as on account of tax refunds, Somani said.
