KOLKATA: Visa SteelBSE 20.00 % will seek shareholder approval to merge joint venture Visa Bao Ltd (VBL) with it to rationalise costs and secure raw material for its ferrochrome business, the company said.
Visa Steel and Baosteel of China are the partners in VBL, with the Indian company holding a 65% stake. The company is also seeking to shift its registered office from Odisha to West Bengal, saying it would help improve administrative efficiency and reduce overhead costs.
The firm will hold a postal ballot soon to seek the approval of shareholders and the results are expected by July 12. Visa Steel’s shares dropped 0.3% to close at Rs 13.65 on the BSE on Thursday. The benchmark Sensex fell nearly 1%.
“In order to have sustainable growth, it is necessary for any ferrochrome producer to have captive chrome ore mine or a captive power plant, if not both,” Visa Steel said in a regulatory filing.
With a view to achieving competitive advantage to ensure availability of chrome ore and concentrates and to optimise utilisation of power plant capacity, it is intended to consolidate the ferrochrome business by amalgamating VBL with Visa Steel, it added, explaining its decision to merge the two.
VSL has two submerged arc furnaces for the production of 60,000 tonnes per annum of ferrochrome and has a 75 MW captive power plant. There is infrastructure to double production. It has also secured a prospecting licence for chrome ore in Manipur for development of captive mine, the company said.
VBL is setting up a ferrochrome plant with four submerged arc furnaces at Kalinganagar in Odisha. While two furnaces have already been commissioned in June 2013, the remaining two are likely to be commissioned in 2015-16 and 2016-17.
Visa Steel’s production of high carbon ferrochrome is affected due to inadequate and high price of chrome ore and concentrates, the company said. The power plant is not operating at full capacity as the generation is impacted due to non-availability of gas from blast furnace and inadequate availability of waste heat from coke oven and direct reduced iron plant.
The company’s total income for the quarter ended March 31, 2016 rose to Rs 278.45 crore from Rs 192.49 crore in the year earlier period. Its net loss widened to Rs 170.10 crore from Rs 117 crore.
Source: Economic Times