Jul 12, 2013 08:09 PM IST | Source: CNBC-TV18

Expect total capacity to increase to 1.5mt by FY16: MOIL

In an interview to CNBC-TV18, GP Kundargi, CMD, MOIL spoke about the newly allotted land in Maharashtra. The company also received prospecting license for 11 blocks near Nagpur and Bhandara regions.

GP Kundargi, CMD of Manganese Ore India Limited (MOIL) is hopeful of procuring high grade manganese ore from the newly allotted lands in Maharashtra. The Maharashtra government allotted 597.44 hectares of land in Nagpur and Bhandara districts of the state. It also granted prospecting licenses for 11 blocks in those areas.

MOIL has reserved Rs 250 crore for conducting geophysical research on the same. The exact richness may not be known but it has the prospects of being a high grade ore, he adds.  He told CNBC-TV18 that the production may take about 3-3.5 years to commence production from this land and will eventually boost the company's manganese output.

He sees the company’s volumes to be at 11.5-12 lakh tonnes for FY14. The production in FY13 stood at 11.4 lakh tonnes. The production from the new blocks and new sharp sinking projects will increase the total output of the company to 1.5 million tonnes (mt) by 2016-17, he says.

The company’s total debtors will be reduced to less than Rs 20 crore as Steel Authority of India Limited’s (SAIL) Chandrapur unit will repay its debt to MOIL by August 2013.

Also read: Expect industrial metals to remain subdued: Nirmal Bang

Below is the edited transcript of his interview to CNBC-TV18

Q: Could you give us some more clarity on the prospecting licence that you got in Maharashtra? What are the reserves currently? More importantly, what is the timeline by which you will secure these reserves?

A: Presently we are having 696 hectares of lease existing in Maharashtra since inception of MOIL. We are working in Maharashtra. In addition of the 597 hectares to the existing land in the adjacent areas of existing leases, good and high grade manganese deposits are available as per the old records.

These mines, these new area prospecting has worked before 1950 by some of the small producers earlier and occurrence is seen. But still, we have to do a detail prospecting by geo-physical and bore well methods. Only then we will come to know the details of the exploration. The reserve position will be very clear then.

But this is very significant for us for increasing the high grade production in MOIL. The high grade production is very limited in India. Only 15 percent of Indian reserves are higher grade. So, this will go in a long way for improving high grade availability in India and meeting their steel requirement. Projected steel requirement is around 125 million tonne over the end of 12th plan where we require about 6.8 million tonne of manganese ore.

Present production in India is only 2.6 million tonne. It is projected to go up to 4.2 million tonne by 2016-2017 as per the 12th Plan. There will be a demand gap of around 2.8 million tonnes. This will help us to improve upon and the timeline what they have got based on the infrastructure available to MOIL, we will be adhering to the time schedule of less than two years for prospecting and also converting these leases into mining leases.

Then we will apply for mining clearances and forest clearances. This is mostly 60 percent land is private and 40 percent of new area what we have got is forest. After getting the due clearances from environmental, forest, minimum we are keeping for ourselves of about three, three and half years to come into production.

Q: What is the volume guidance for MOIL for FY14 if you can throw some more light on that? Is there any inventory pileup given the weak steel demand scenario that you see?

A: As far as domestic demand, we have got sufficient domestic demand more than our production presently. MOIL is producing about 1.14 million tonne. Last year we had produced about 11.4 lakh tonne which will be in the range of 11.5 to 12 lakh tonne during FY13-14 as compared to 11.4 during FY12-13.

This is going to be there for the next one year where we have already invested in the expansion projects of under ground mine. We have taken up short sinking projects and next year we are going to commission two under ground vertical sharps which will help us to improve the production by 2015-2016.

We are deepening the existing vertical in other mines. Put together, we are expecting a production level to increase to 1.5 million tonne by the end of 12th plan i.e. 2016-2017. Our plan is to improve the production from the existing mines by the expansion to 2 million tonne by 2020.


Q: Your bid to get a coal block failed that you intended it for your diversification process. Is there any alteration in your expansion plans because you didn’t get that coal block?

A: It was a long-term planning. We had applied for coal blocks for captive purposes to go in for power production so that we can cater to our ferro alloy production. We wanted to increase the ferro alloy production with power backup which is an essential ingredient for ferro alloy production.

We have two joint ventures coming up with SAIL and RINL which at present are delayed due to the power availability so we are tying up for the power. Since coal blocks are not allotted to MOIL; mostly the coal blocks have gone to utilities- state and central government. We will be looking at joint ventures with SAIL and RINL for power production combine together instead of going alone now.
Q: Could you also throw some light on your debtor position because there was an increase of three times in the fourth quarter. Will there be some reduction in your total debtors this time?

A: Main debtors were due to SAIL because they are running a ferro alloy plant at Chandrapur regarding the supplies. They have liquidated maximum portion of debt. By the end of this quarter we don’t have to face such kind of problem.

Q: What will be the debtors now?

A: It will be almost less than Rs 20 crore or so.

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