Dhruvdesh Metasteel plans expansion

Dhruvdesh Metasteel Pvt Ltd, a Bangalore-based manufacturer of sponge iron, is embarking on both forward and backward integration projects to manufacture finished steel products and double its existing capacity to 60,000 tonnes per annum at an investment of Rs 120 crore. The company will soon start extracting its own iron ore at a mine in Tumkur district.

According to Prasad R Deshpande, managing director, the company is setting up a new manufacturing unit with a capacity to produce 40,000 tonnes of high-end steel bars and structural steel used in construction industry.

Its plant is spread over an area of 65 acres at Hirebaganal village in Koppal district. The expansion programme includes setting up of a steel melt shop, rolling mill and an 8-Mw power plant for its captive consumption.

 

The company is currently in talks with a host of banks and financial institutions to raise Rs 80 crore to fund its expansion. “We have just completed the work on doubling our sponge iron capacity at an investment of Rs 18 crore at Koppal and will soon start work on our forward integration project. Our existing bankers - Andhra Bank and Oriental Bank of Commerce are willing to extend further funds for our expansion. However, we are also in talks with some other public banks for raising debt of Rs 80 crore while the remaining Rs 40 crore will be pumped in by the promoters,” Deshpande said.

The company is currently supplying 100 tonnes of sponge iron every day to various steel companies and induction furnaces in and around Koppal including Kalyani Steel.

In addition to forward integration, Dhruvdesh Metasteel is also planning a backward integration project. The company, which is presently procuring its basic raw material, iron ore, from private mines in Bellary-Hospet region, will soon start mining in its own mines.

It has been allotted a mining lease for 20 years by Karnataka government to extract iron ore at an area spread over 116 hectares at Chikkanayakanahalli in Tumkur district. The Indian Bureau of Mines has granted permission to the company to extract half a million tonne of iron ore per annum.

“We have secured most of the clearances including ministry of environment clearance to start mining except forest clearance and we wish to secure it in the next couple of months and start mining thereafter,” Deshpande said. Dhruvdesh reported a net profit of Rs 3 crore on a turnover of Rs 36 crore in 2007-08.