Mesco plans Rs 13,500 crore investment to raise capacity in 3-5 years

BHUBANESHWAR: Mesco Steel will be relisted soon and the company will invest Rs 13,500 crore over the next three to five years to expand annual capacity to 4.5 million tones, a top company executive has said.

In April, the private steelmaker in Odisha’s Kalinganagar Industrial Area had acquired the next door ailing Maithan Ispat for Rs 1,160 crore, adding steel billets and beams to its pig iron capacity.

Natasha Singh, Mesco's director finance, said that with some adjustments and upgradation, converting their 1.2 MT pig iron plant into a 3.5 MT steel plant and expanding their 0.8 MT steel plant at Maithan into 1 MT, will take total annual capacity to 4.5 MT of steel.

In the nineties when Rita Singh, her mother and CMD, set out to set up a steel plant in Odisha, she was among the first to arrive at Odisha’s industrial estate of Kalinganagar. Today, Tata Steel is completing construction of a 3mt steel greenfield plant in Kalinganagar, which is also home to Visa, Jindal Stainless and Neelachal Ispat, companies seriously challenged by raw material issues and high debt.

Mesco's pig iron plant is also faced with a challenging market environment, with prices of the product sliding fast along with the international price of steel and related commodity.

Singh said investors are still optimistic about the Indian market because of the Narendra Modi’s government 'Make-in-India' initiative.

"The global overcapacity has created a challenging market. Chinese government is willing to bankroll their steelmakers to set up plants overseas. The government's infrastructure drive though will still bail Indian steelmakers," she said.

Mesco, whose existing mining leases were extended recently, has also won rights to an area of the Malantoli reserve. It is iron ore, some of which it exported and supplied to British trader Stemcore through the Chinese driven commodity boom of the last decade that allowed Mesco to pay back its debt. Mesco can now boast of a debt-free balance sheet (although it ’s taken on Maithan’s debt of about Rs 700 crore), land, a railway siding that’s being used by Tata Steel's Kalinganagar unit today.

In Mesco, the Singh family holds 65% of shares, Stemcore 10% and the remaining is held by the public. The company, delisted in 2002, now has compliances in place and is ready to be listed again, Singh said.

Mesco is currently evaluating a feasibility report to set up a finex unit under a joint venture with South Korea’s Posco Steel. If they decide to run the fines-based plant, they might require 100 MW power for which they could partner with a company like Tata Power, said PC Sahu, joint MD, Mesco Steel.