Mideast Integrated Steel Ltd (MISL), a Mesco group company having an one million tonne pig iron plant at Kalinganagar in Jajpur district of Odisha, plans to upgrade the unit to a 1.2 million tonne finished steel product facility by the end of December 2014.



“The company has begun upgrading its Kalinganagar plant into a fully integrated steel plant of 1.2 million tonne per annum (MTPA) capacity. With an investment of Rs 1,000 crore, a steel melting shop with rolling mill for rebar and wire rod is being set up,” said J K Singh, president of Mesco Group.



The expansion plan of the pig iron plant was announced in 2008, but the company had to shelve the proposal for some time due to heavy debts on its balance sheet.  It became a debt-free company in the last fiscal, following which it has started focusing on the upgrading project, he said.  “In the next phase of expansion, the finished steel capacity would be ramped up to 3.5 MTPA,” added Singh.



MISL, which started production in 2005, has been making steady profits for last three years from pig iron sales and has decided not to sell pig iron once its expansion plans are completed. For the upcoming capacity enhancement, the company said, it has finalised technical and financial details after a high level team of MISL visited China.



Out of the Rs 1,000 crore to be invested, the company would arrange Rs 300 to Rs 400 crore from internal accruals and bank loans. The rest amount would be financed by Chinese and Japanese financial institutions.   “A lot of western countries are interested to finance the project, but we are keen on getting debt finance from China and Japan since their currencies are more stable than western countries,” said Singh, hinting at rupee-dollar volatility. The company has links to iron ore and coal mines, which helps it to produce intermediate steel products such as pig iron at lower cost. However, with the recent and upcoming expansion plans, the cost of production of steel is expected to go up.



Mesco Steel is in the process of setting up a conveyor and a 1,400 tonne per day crusher unit at its Roida iron ore mine to boost output. It has recently commissioned a 2,000 tonne per day sinter plant and is constructing a half million tonne slag processing plant at Jajpur.



The company is considering to shift the registered office in New Delhi to Bhubaneswar to avail tax benefits and will discuss the proposal in the next Annual General Meeting (AGM), informed Singh.