Electrosteel Steels - Khandwala Securities

We have visited 2.51MTPA integrated steel plant of Electrosteel Steels Ltd ("ESL"), which is an associate company of Electrosteel Castings Ltd ("ECL") in Bokaro, Jharkhand. The total cost of project stands at INR 95.6 bn out of this INR 90.0 bn has been incurred till date. 95% of total capacity is near completion stage, few of the major capacities have already commenced production such as 350m3 Blast Furnace, 1.2 MT Sinter Plant, 1.0 MT Coke Oven Battery are running smoothly. The total capacity will be focused on long product, as company expects the demand to continue higher than flat product. The product mix includes wire rod, TMT bars, ductile iron (DI) pipes, billets and pig iron.

On the mining side ESL has signed a contract with its parent company ECL to supply coking coal and Iron Ore at cost plus 20% margin basis. The coking coal mine has already started producing and has produced 150000 ton, in FY2012. Company expects coking coal mine to take another 12 months to start production in full swing, whereas on iron ore front ECL is awaiting Forest stage-II clearance.

Company expects the production to start from the iron ore mine within three to six months of signing a mining lease after it gets all necessary clearances. Although the company is hopeful to start production from March 2013, we believe it is currently challenging to estimate the timelines for completion of clearance formalities.

Source : Equity Bulls

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