Usha Martin plans to cut steel production cost from March

January 29th, 2009 - 9:58 pm ICT by IANS  

Kolkata, Jan 29 (IANS) Speciality steel and wire rope producer Usha Martin is planning to scale down cost of steel production from March, aimed at increasing its operating margin, a top company official said here Thursday.”By the end of February, all our expensive raw material stock will be out of the system. From March, we can produce steel at around Rs.15,000-16,000 per tonne from the present Rs.27,000 per tonne,” Usha managing director Rajeev Jhawar told reporters, assuming that coking coal price and freight cost will be less.

Asked whether this reduction in production cost will bring down selling price, he said: “There will not be any reduction in selling price as we have already brought it down to make it at par with the market rate.”

The company has reduced selling price to Rs.33,000 per tonne from Rs.45,000-48,000 per tonne during the peak period in March-April 2008.

The cost of production was in the tune of Rs.31,000 per tonne at the time when steel prices skyrocketed due to high input cost during March-April.

Jhawar said operating profit margin for the present quarter will be under pressure but things will change from the next fiscal.

“With the new material prices (lower than previous one), commissioning of the direct reduction iron (DRI) 30 MW power and rolling mill, we expect 20 percent plus margin from next quarter,” he said.

Regarding the Rs.21-billion expansion plan to ramp up steel capacity to one million tonnes at its Jamshedpur plant, he said: “The second DRI, power, steel melting shop and rolling mill are at the final stages of commissioning. We expect the trial runs to start in February.”

Jhawar attributed two months’ delay in commissioning of the project on supply delays.

With the commissioning of this project, the steel capacity will go up to 650,000 initially from the present 360,000 by April, he said.

Two more projects of the company - sinter plant and blast furnace - will be commissioned by third quarter of next fiscal.

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