Ispat Seals Pacts With Itochu, Mitsui

Ispat Industries, the Calcutta-based steel major, has entered into two separate agreements with Japanese trading houses Itochu and Mitsui for global marketing of hot-rolled (HR) coils to be produced at its proposed hot-strip mill at Dolvi in Maharastra. It will export nearly 50 per cent of the total output at three million tonnes per annum (mtpa).

Itochu and Mitsui will lift 0.5 mtpa each of the estimated 1.425 mtpa slated for export. Cost considerations have not been worked out and the Mittals, the promoters, are negotiating the financial aspects of the MoUs with the Japanese companies. The agreements will be legalised after commissioning of the hot strip mill.

The MoUs will enable Ispat to avail of the benefit of zero import duty under the export promotion capital goods (EPCG) scheme. The 1.425 mtpa proposed for export will be realised in two phases. The first phase is expected to go on stream in Oct 1997

The plant, which will use the DRI-EAF process, can produce HR coils of 1.2 mm thickness. At present, the minimum thickness of HR coils produced in the country is nearly 1.8 mm and requirement of lesser gauge coils are met through imports. The company expects this will give it an edge over other major producers

Of the remaining 50 per cent, Ispat will consume 0.3 mtpa while the rest will be sold directly to bulk domestic purchasers. A dealer network is also on the cards and the company will set up four regional yards for its products.

According to company estimates, it will be able to post a net profit of Rs 333 crore after the completion of the HR coils unit in 1998-99. It has projected a net profit of Rs 91-crore for 1996-97 on a sales of Rs 1,227 crore. It had recorded a net profit of Rs 100 crore in 1995-96.