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Mar 28, 2011, 04.03 PM IST
PK Mukherjee, MD, Sesa Goa, in an interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee, gave his views on the recent happenings in this company and the road ahead.
PK Mukherjee, MD of Sesa Goa, in an interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee, gave his views on the recent happenings in this company and the road ahead.
Below is the verbatim transcript of the interview. Also watch the accompanying video.
Q: What was the primary attraction for Bellary Steel form Sesa Goa? Was it the 700 acres of land or the steel operation? Why did you go for it?
A: Bellary Steel assets will give us a head start in our sales of value addition. Various state governments including Karnataka State government is planning for expansion of mining business. They will not allot any new mining leases unless there is a valued issue commitment.
Bellary Steel gives us a perfect platform to show our commitment. In India, any new investment, either steel or any other sectors, has to go through a lot of processes without any clearance. Land acquisition itself is a big process throughout India.
Q: There are reports that JSW steel might move to get some kind of litigation on this buy and seek to block Sesa Goa’s buy of Bellary Steels. Do you have any update on that?
A: I don’t have any further information on this. We have not fought with Jindal. We have got it from Industrial Financial Corporation of India (IFCI), as a sale to their purchase yet. As and when we get any notice, we will study the situation and then react.
Q: In case you acquire it, what is your plan for the 700 acres of land that Bellary gets with it?
A: Last week, the land has been registered in our name. The asset sale is complete. Now, we are accessing the assets other than the land which are constructed half or fully done or some of the loose equipments align.
These are getting independently evaluated. In a couple of months, we will come out with whatever feasibility is required and take it forward.
Q: The export duty hike was announced after the budget. How will that impact the realisations and performance for Sesa Goa?
A: In all the exports of India including that of Sesa Goa is primarily of iron ore fines. The export duty on that has been increased 300 times. This means that 5% has now gone to 20 % and 15% additional has been straight away knocked of from the sales realisation.
On an average, if we configure USD 100 realisation, then we will have to think about the USD 15%. The same number multiplied by the volume can be easily calculated.
Q: How is the global iron ore pricing situation now? Over the last few weeks, what have been the developments from China and Europe?
A: The percentage drop from mid February to mid March is between 10-15%, depending on the grades, where lower grades have got a bigger hit than the higher grades. For last couple of days, it has been showing some stability as some places 1-2 is going up.
Guessing the iron ore price is difficult. The demand has been quite robust with two-three years. The sense from China is that their field demand is quite aggressive and strong.
Q: The major concern for Sesa Goa is volume growth. You indicated that your capacity increase for Karnataka is 10 million tonne. Can you update us on that? Is Sesa Goa on track to achieve the target?
A: Sesa has the environmental control permit or capacity license of about 6 million tonne. We could never achieve 6 million tonne from the time we have it because of the various issues including the latest export ban.
We are on the process of increasing our capacity from the further environmental permissions. We expect that to happen sooner than later. Ones it happens, we will be in the position to deliver a quantity of 10 million tonne.
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