The Monnet Ispat group is in "final stages of talks" to acquire iron ore and manganese ore mines overseas, in addition to two iron ore mines from private players in Jharkhand.
In all probability, the overseas acquisitions will be in the Gulf and CIS regions. A formal announcement to this effect will be made next month.
Executive vice-chairman and managing director Sandeep Jajodia said the company was "in talks with two private players for acquiring two mines of 25 million tonne proven reserves in Raigarh. All expansion plans by June '06 in the region will come at a cost of Rs 600 crore (Rs 6 billion).
Jajodia also said that "talks were in final stages for acquiring overseas iron ore mines with proven reserves of 250 million tonne and another mine of 25 million tonne of manganese reserves".
The expansion in Raigarh will include increasing sponge iron production capacity to 0.8 million tonne from 0.3 million tonne. The company will also be increasing steel capacity production by 0.4 million tonne from the present capacity of 0.3 million tonne. The company will also be setting up a 250 mw power plant. Already the company is producing electricity at Rs.1.20 a unit.
"Approximately, Rs 230 crore (Rs 2.3 billion) would go towards sponge iron expansion, Rs 300 crore (Rs 3 billion) to set up power plant and the balance towards steel," said Jajodia. He also hoped that these plans should be completed by June 2006.
Raising funds should not be much of a worry for the company. "On the financial front, the company looks healthy as the company reported a 337 per cent growth in net profit at Rs 123.83 crore (Rs 1.24 billion) for the year ending March 31, 2005," said a Mumbai-based steel analyst.
Earlier this year, the company had released a press release saying that it would be listing its 60 million dollar foreign currency convertible bonds on the Singapore Stock Exchange.
