Thinking about the execution risk with DI plant commissioning and stabilization: -
Company recently (Oct 2022) hired a Chief Operating Officer who was with Tata group since 2013 and was VP of operations of Tata Metaliks for last 5 years.
For Tata Metaliks, utilization levels of DI pipe have been 80-90% in FY22. This experience should come handy in stabilizing DI plant for Sandur.
Additionally, Tata Metaliks do not have captive iron ore and buys from Tata Steel. In FY22, Iron ore constituted ~38% of total raw material costs and ~23% of revenue for Tata Metaliks.
Tata Metaliks’ raw material purchase cost includes iron ore, coal & partly coke (~20% of coke is purchased from outside, 80% is internally produced [src - Q1FY23 concall])
Sandur’s raw material purchase would be just coking coal.
In recent TV interview, MD reaffirmed that expansion of DI plant is going as per plan and is expected to be commissioned in FY25/end of FY24.
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