Mesco Steel to raise $400 mn through ECBs for capacity expansion

Company also going for credit rating before raising funds to meet its working capital requirement

Mideast Integrated Steel Ltd (MISL), a Mesco Steel Group firm, plans to raise $400 million through external commercial borrowings (ECBs) to expand its steelmaking capacity at Kalinganagar from 1.2 mtpa at present to 3.5 million tonne per annum (mtpa).

“We are now planning to increase the steel-making capacity of the plant to 3.5 mtp in two phases, for which we have an option to raise foreign debts as some banks are willing to pay the amount,” said Rita Singh, chairperson and managing director, MISL.

The public hearing for the expansion has been completed and the documents have been submitted to the Government of India for clearances, she added. The company is also going for a credit rating before raising funds to meet its working capital requirement.

“As we are a debt free company, we don’t have any loan account now. Before going for the working capital loan, we will do a credit rating,” said Singh. The company plans to commission its steel-making facility in three- four years after getting the clearances. In the first phase, the plant will have installed capacity to produce 2.5 million tonne steel per annum while it will it will be ramped up to 3.5 mtpa in the second phase.

The steel maker has also identified some steel intermediary manufacturers in the state for acquisition. “We are in talks with some promoters in Joda Barbil area, Cuttack etc for acquisitions which will be viable,” said the chairperson.

In addition, the company is expanding the capacity of its private railway siding from 6 mtpa to 9.20 mtpa from its internal resources.

To increase the efficiency and cut operating cost, a wagon tippler, an oxygen plant, pulverized coal injection unit and bell-top charging system for the blast furnaces will be installed at the Kalinganagar facility. MISL has posted Rs 55 crore profit after tax in the third quarter (October to December) helped by better sales realisation from sales of pig iron.

The company has reported sales of Rs 200.38 crore, which is 22 per cent higher than the figure achieved in the same quarter last year. During the first nine months of the current fiscal, the sales of the company has jumped to Rs 590.46 crore.