The Hindu Business Line : Gangotri Iron & Steel: Solid gains

Gangotri Iron & Steel, which is expanding capacity through new TMT bar and wire rod plants located near Patna, has been moving up strongly in the recent weeks on positive developments related to its fundamentals.

According to market grapevine, the new billet and TMT bar plant to be commissioned shortly, would substantially improve its price realisation.

When contacted, Mr Sanjiv Kumar Chowdhary, Managing Director, told Business Line that the Rs 50-crore, 1.2-lakh tpa billet and TMT facilities would be commissioned by the end of next quarter (December 31). The 60,000 tpa wire rod plant with an induction furnace would become operational in April 2008 at a cost of around Rs 14 crore.

Cost savings

He admitted the projects are likely to cause cost savings — between Rs 1,200 and Rs 1,500 per tonne for TMT bars and wire rods, which at the current retail price levels in the target markets of Bihar and Uttar Pradesh (for both the products) represent cost advantage of 50 per cent or more.

“The advantage would accrue on three counts — 7.5 per cent price preference from Government orders, 90 per cent VAT refund (roughly between Rs 300 and Rs 400 per tonne) and relief on CST for sales in the neighbouring States,” Mr Chowdhary explained.

“The technological edge (German) would induce savings in the power cost too. Increased infrastructure and project activity in the nearby region also provides logistic advantage,” the official added.

The company would soon issue about 40 lakh shares to mop up around Rs 12 crore, including premium. It has already raised around Rs 8.5 crore through warrant conversions and Rs 27.75 crore through borrowing from SBI.

The stock on Tuesday closed at Rs 43.55, recording a gain of over 51 per cent in the last one month, with a volume of 80,697 shares on the BSE.

Jayanta Mallick

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