Essar Steel, a leading Indian integrated steelmaker, has reported an operational turnaround since November last year.
The company reports that production has doubled and the company is currently operating at a 70% capacity utilisation rate. This in turn has resulted in a significant improvement in the company’s EBITDA, which has improved by 18-20%, up from 5%. In the financial year 2016/17 Essar Steel hopes to boost its capacity utilisation rate to 80-85%.
Upstream and downstream expansion projects have enabled the company to achieve an annual capacity of 10Mt/yr.
“The availability of gas at economic price has enabled Essar Steel to operationalize the gas-based DRI units as well,” claims the company, adding that captive gas from COREX and Essar’s blast furnace aided its DRI operations.
Dilip Oommen, managing director and CEO of Essar Steel, commented: “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,” he added.
The introduction of a minimum import price (MIP) and the need for Bureau of Indian Standards (BIP) approval has enabled the Government of India to curb cheap steel imports from China, helping India to contain the oversupply situation.
In terms of raw materials, Essar has ‘won’ an iron ore mine in Odisha at auction. The mine in question has a deposit of 99Mt and will meet 50% of the annual iron ore requirement of Essar’s Paradeep pellet facility.
Pellet plants in Paradeep and Vizag are both operational and are ensuring a consistent supply of pellets to the Essar’s steel plant.