Essar Steel doubles production; operating at 70% capacity utilization

KOLKATA: Essar Steel had doubled its production since November and is now operating at 70% capacity utilization, the company has said indicating that it is on its way to post a turnaround in the March quarter. The company, which has a 10 million tonne per annum (mtpa) steel-making capacity at Hazira in Gujarat, expects to clock a capacity utilisation rate of 80-85% in the coming financial year starting April 2016.

In a statement issued on Wednesday, the company also said its debt/tonne at Rs 30,000 is lower than the industry average of Rs 35,000 per tonne. The company said it has already paid lenders over Rs 20,000 crore in the last three-and-a-half years by way of interest and principal repayments with promoters infusing Rs 9,000 crore. The balance has come through improvement in Ebidta (earnings before interest, depreciation, taxes and amortization), margins to 18% from 5% in November 2015.

Commenting on the performance, Dilip Oommen, Essar Steel MD said: “Our efforts over the last few months in strengthening our operations, supported by stable markets and encouraging response from our customers, has given us the confidence to aim at full production in the next fiscal. It is heartening that we are able to achieve this while maintaining higher operating margins. We believe it is comforting to all our stakeholders.”

For the entire 2015-16 fiscal, Essar Steel India expects to clock aate of 50-55 per cent as against 30-35 % in 2014-15. Essar Steel said it has completed all the upstream and downstream projects and all units have become operational. Availability of gas at economic price has also enabled it to operationalise gas based DRI units, which has been further aided by use of captive gas from COREX and blast furnace.