Steel to go strong from Oct, prices will rise: Monnet Ispat

Monnet Ispat recently received the forest clearance for the Utkal coal block in Orissa and the company now has set the target for March to start mining. In an exclusive interview to CNBC-TV18, the company executive vice chairman and managing director Sandeep Jajodia says that the company plans to mine about three million tones from Utkal. "Also, we will mine 5 million tonne from Madakini block which is close by to fuel our 1,050 megawatt power plant," Jajodia adds.

Despite the negative global cues he says going forward the company is looking forward to a good time in steel business. "A lot of projects are held up but they should come along. Considering all the factors, steel should behave better and come October the prices should start looking up," he adds.

Below is an edited transcript of Sandeep Jajodia's interview to CNBC-TV18. Also watch the accompanying video.

Q: When are you expecting to start production now that you have received the environment clearance at the Utkal coal block in Angul in Orissa? How much are you planning to produce from there? When does it commence production?

A: We received the environment clearance about two years ago and we recently received the forest clearance as well. There are few formalities left where we just got assigned the mining lease and get the approval from the director general of mine safety. It is a small clearance that we are awaiting and which is going to be done towards the end of the calendar year. Therefore, March is the target month where we start mining and we plan to do about three million tones out of that mine. We have got another mine close by, which is called Madakini where we will do 5 million tonne. Therefore, we want to fuel our 1,050 megawatt power plant coming up there.

Q: Tell us about your operations at the steel plant itself. Do you expect your sales in the second quarter as well in the second half to be a shade better than what you did in the first quarter? How is demand looking at the current juncture, given the fairly negative cues received in terms of growth?

A: We expected the markets to behave better and demand to be better but that has not really happened. One of the factors is monsoon because during monsoons, construction activities are low and it is traditionally the steel markets also go down. Secondly, all the money is allocated for large structure projects have not really kicked off. Hence, if India has to grow at 8-8.5% this infrastructure growth has to happen and of course will result in steel consumption as well.

However, we are looking forward to a good time in steel business and come October the prices should start looking up. We understand that a lot of projects which are being held up for whatever reasons but they should come along. Hence, considering all of that steel should behave better but in the first half I don