Pioneering beneficiation of low grade ore: Adhunik Metaliks

Q: You recently started your new pellet plant at Kandra, could you tell us what the production from there has been and how much can you scale it up and how much will it add in FY12?

A: Plant capacity is currently 1.2 million tonne and we are scaling it up to 1.8 million tonne in the next phase. 1.2 million tonne is already commissioned and commercial production has started. It has stabilised and the capex involved is Rs 530 crore.

The highlight of this project is that we are using low-grade iron ore. We are the pioneer in this field of this scale of beneficiation of ore starting at 55% Fe-content.

This segment of fines is very cheaply available in the market, so there is lot of value addition in the process.

Further down the chain, we are an integrated steel makers. So this will add to our steel compliance also, it will add to our existing capacities and to our quality and productivity. That is the highlight of our pellet project.

Q: What sort of impact will we see directly on the P&L once this gets commissioned in terms of some amount of operating efficiency and margin front because that seems to have been a problem for you in Q2 where your EBITDA was down 30% odd?

A: It will definitely add to our bottomline significantly, and the plant is already commissioned one and half months ago. It has already started to add to the bottomline. There will be significant increase in productivity in the entire chain from iron making to steel making. We are also selling it to the market, so that will improve our cash flows too.

Q: So is it fair to assume that the net loss that you made in the previous quarter you would possibly be in the black for the second half of the fiscal and what exactly would be the weightage in terms of interest costs?

A: We are expecting significant improvement because in our 100% subsidiary, Orissa Manganese & Minerals Limited (OMML), we have started a new mine. This has capacity of 3 million tonne and pellet too has been started in this quarter. The effect you will start seeing at the end of this quarter itself, which is significant over the past quarter. So we will have improved bottomline and the industry is also improving.

Coal blocks around the world are starting and availability of coal is slightly better. So we see a good future for the industry in the last quarter of this financial year and the next financial year.