Essar Steel has been able to achieve a turnaround in production and sales with low gas prices, less dependence on natural resources through higher production in blast furnace, Corex and Coke making an
Essar Steel has been able to achieve a turnaround in production and sales with low gas prices, less dependence on natural resources through higher production in blast furnace, Corex and Coke making and raw material security through captive pellet plants and winning of iron ore mine with a reserve of approximately 100 million tonnes. It sales are Rs 16,800 crore.
The company has targeted a growth of eight million tonnes per annum (mtpa) by year end and was confident of achieving this.
It has already increased its production from 3.7 mtpa in February to 6 mtpa and 8 mtpa by the end of this fiscal. The plant capacity is 10 mtpa.
The company has brought down its administration and overhead costs by 30 per cent and were able to complete projects at competitive prices.
Its outstanding debt is Rs 30,000 crore after paying Rs 20,000 crore over the years to banks as interest and principal with the promoters putting in Rs 9,000 crore and the rest through increased EBIDTA. The Essar spokesperson said their EBIDTA doubled to 18-20 per cent comparable to their peers. Earlier it was 5 per cent.
Their debt/tonne is at Rs 30,000 against the industry average of Rs 35,000 tonne. Of the Rs 30,000 crore outstanding debt, Rs 15,000 crore is under 5x25 scheme with the banks which means average interest rate is 10 per cent so the interest outgo is Rs 3,800 crore per year in addition to Rs 300 crore as repayment.
