Financial Daily from THE HINDU group of publications
Tuesday, Jul 26, 2005
Nava Bharat Ferro plans Rs 200-crore expansion
Hyderabad , July 25
NAVA Bharat Ferro Alloys Ltd (NBFAL) is evaluating expansion plans involving around Rs 200 crore investment for its ferro alloys, power and sugar facilities.
This is part of the company's mega plan to attain control over power and ores in a bid to sustain long-term viability and be globally competitive, especially in the backdrop of recent violent swings in the prices of ores and finished products, the NBFAL Finance Director, Mr G.R.K. Prasad, said.
The Hyderabad-based Rs 559-crore company currently has three furnaces in Andhra Pradesh with a total capacity of 75,000 tonnes per annum and two furnaces in Orissa with a capacity of 50,000 tpa.
Following a Rs 20-crore de-bottlenecking programme taken up at Orissa furnaces, the capacity has been recently increased to 75,000 tpa.
NBFAL is evaluating a plan to add another furnace in Andhra Pradesh with a capacity of 50,000 tpa, involving an investment of Rs 35 crore. This would take the capacity in the State to 1,25,000 tpa.
To overcome the supply side pressures, NBFAL proposes to enter into long-term supply contracts with leading traders and steel producers and avoid stock overhang at the expanded capacity levels. Further, Mr Prasad said, the company's efforts on the chrome ore-mining lease might take some more time to fructify in view of the directions of Supreme Court, while efforts were under way to obtain reasonable control in the manganese ore area by strategic associations.
The company is also evaluating expansion of its power facilities. It currently has 50 MW capacity in Andhra Pradesh and 30 MW in Orissa. It is planning to set up an Rs 80-crore power plant with 32 MW capacity, which would take off by January next. To meet additional power requirements of Orissa furnaces, NBFAL is looking at drawing power from inter-State transmission of surplus power from Andhra Pradesh or from the local grid. It is also considering a plan to set up 15 MW captive power generation plant in Orissa, he said.
Having expanded cane-crushing capacity from 2,500 tonnes per day (tcd) to 3,600 tcd recently, the company is now weighing options to raise the capacity to 4,500 tcd first and further to 5,000 tcd over the ensuing two seasons. The co-generation capacity would also be increased to 9 MW from 5 MW at a cost of Rs 20 crore.
Mr Prasad said being a port-based unit and in close proximity to the sugar consumption zone, NBFAL is also looking forward to opportunities in the area of importing raw sugar and refining it. Currently, the average cane-crushing season is around six months a year. The proposed raw sugar refining activity would enable the company use its idle capacities for another three-four months.
Stating that the raw sugar refining activity offers exciting opportunity, Mr Prasad, however, said the company did not work out its impact on its business volumes.
The stock is currently hovering at Rs 360 on both the BSE and the NSE with a year's high of Rs 456 and low of Rs 182.
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