KIOCL plans to invest Rs 25 billion to set up pellet plant in Visakhapatnam

Allocation of a captive mine has provided respite to the state-owned entity, operating a 3.5-million tonne per annum pellet plant in Mangaluru

KIOCL, formerly known as Kudremukh Iron Ore Company Ltd, is planning to invest about Rs 25 billion for setting up a 1.2 million tonne pellet plant in Visakhapatnam, apart from diversifying its product portfolio to add Ductile Iron (DI) Spun pipes in the near future. 

The company, which had been badly hit after losing its iron ore mining lease in the eco-sensitive Western Ghats, had got approval for allocation of a mining lease spreading over 474 hectares in Ballari district of Karnataka last year. 

Allocation of a captive mine has provided much needed respite to the state-owned entity, which is operating a 3.5-million tonne per annum pellet plant in Mangaluru. 

“KIOCL will set up a pellet plant in Vizag, which will then supply it to the nearby steel unit run by Rashtriya Ispat Nigam Ltd (RINL). The surplus pellet will be exported from the port city,” Union Steel Minister, Chaudhary Birender Singh, has said. 

According to a senior official at KIOCL, for the proposed pellet plant in Visakhapatnam, iron ore will be sourced from Karnataka. 

After incurring losses in 2015-16 due to absence of captive mines, the company had turned around to post a net profit of Rs 479 million in 2016-17. 

In the last financial year ending March 2018, net profit of the company rose by 70 per cent to Rs 815 million as against Rs 479 million reported in the same period of last fiscal. Its total sales also showed an uptick to increase by 80.5 per cent to Rs 15.70 billion in FY18 against Rs 8.7 billion reported in the previous fiscal. 

Meanwhile, the company is also slowly diversifying its product portfolio to boost profitability. As part of this initiative, KIOCL is planning to manufacture DI pipes. The country has a fewer number DI pipes manufacturers while the demand for this product is high, which is majorly used in water supply and sewage operations. 

“Product diversification, along with both forward and backward integration is one of the strategies, KIOCL is currently working on. Manufacturing of DI pipes will be part of this initiative,” the official said. 

The central government undertaking had earlier announced setting up a captive solar plant at its Mangaluru facility. As part of its long-term diversification initiatives, KIOCL is also planning to set up a coal washery project apart from entering into commercial coal mining in the coming years.