After recently acquiring the Maithan Ispat plant at Kalinganagar, which was under the corporate debt restructuring mechanism, Mesco's Director-Finance Natasha Singh Sinha has said the company will turn the loss-making plant into a profitable unit within eight months.

Mesco Integrated Steel, which has received six-seven proposals from banks to consider acquiring more such plants, will not have any job cuts in the merged entity.

PC Sahu, the company's Joint Managing Director, has said that there won't be have any job cuts in the integrated entity. Rather there are learnings from each unit. For instance, each unit had its list of vendors, which were supplying material at lower costs. They now share the vendor’s lists to procure materials.

For each such proposed acquisition, Mesco will require equity of Rs 100-150 crore, though the company is doing technical studies of the proposals right now, said Sinha. Before each such acquisition, the company looked at the synergies such as scalability, distance from raw material sourcing to lower the transportation costs and synergies with company's facility.

For the Maithan India steel plant, which had a debt of Rs 900 crore from an SBI-led consortium, Mesco now has an additional sanction of Rs 254 crore. The equity component of this will be Rs 84 crore. The debt will be repaid in 10 years, with a reset clause every year. The interest rate, which is at 12-13 per cent now, is linked to SBI's prime lending rate, said Sinha.

After acquiring and restarting production at the Mesco-2 unit, the company will look at exporting the products to Middle Eastern markets where a lot of infrastructure development is taking place, though it expects to cater primarily to the domestic market.

The group, which is increasing the production capacity of its iron ore mines, will divest a minority stake in Mesco-2, for which it has received several interests from other steel companies, including Chinese ones. “We are getting a lot of calls from Chinese companies,” said Sinha.

The company, which was delisted earlier, plans to be listed within this calendar year.

“This is the right time to invest as the asset prices are low,” she said, when asked why they were acquiring a steel plant at a time when the steel prices are ruling low.

Sahu also pointed out that it is only the BRIC nations -- Brazil, Russia, India and China -- that are still looking to have steel manufacturing plants. The European and Western countries are only sourcing finished steel products to design

The Kalinganagar area has several plants including those of Tatas, Jindals and Visa. Mesco's also has a rail siding for transporting the products, which will be used by Tatas temporarily through a tie-up. Power and fuel costs have come down.

With access to iron ore, the company is looking to scale up its capacity to 3.5 million tonne with an investment of Rs 13,500 crore over the next few years.

Related Topics