Objective of infrastructure project is to provide goods & services to public
Lending during construction phase-high degree of risk
Long gestation period
Infrastructure project-large & complex
Technology involved-requires constant upgradation
Project financing sources are difficult to find
Mitigation of participant risk –All sponsors have a strong background
Legal risk can be reduced through proper contract agreement s
Gaurav Ferrotech Pvt. Ltd. (GFPL), a part of Gaurav Group, proposes to set up an 8X13.5 MVA ferro alloy plant at Haldia, West Bengal.
Total capacity => 119,401 tpa of ferro manganese
=> 61,406 tpa of silico manganese
The promoters have adequate experience in implementation and operation of a ferro alloys plant.
Gaurav Ispat Alloys Ltd. (GIAL) already operating a 38,500 tpa ferro manganese plant at Durgapur.
90% of the production is exported. GIAL has also developed capabilities for producing export quality ferro manganese from silicious manganese ore chips/fines. The company has already identified and put together an experienced team for execution of the Project and monitoring day to day operations of the plant.
Cater mainly to the international markets since demand for high grades of Ferro-alloys are higher in the international markets.
The company is at an advanced stage of negotiation for entering into an agreement for supply of Manganese Ore (lump) with Comang Mine, South Africa for a period of 30 years.
The company is also exploring the option of acquiring a manganese ore mine in Indonesia.
The promoters are already operating 38,500 tpa Ferro – Manganese (FeMn) plant at Durgapur The promoters have developed relationships with various international buyers for supply of FeMn and SiMn.
The promoters would use its current marketing expertise for sale of GFPL’s products. They are also considering setting up of international trading business in Ferro-Alloys and other steel intermediaries through a separate marketing outfit. In this regard, it has identified a top executive with over 10-year experience in international marketing and business development to head the company.
GFPL has signed MoUs with the following international buyers for supply of FeMn and SiMn
Name of the buyer MoU date Yearly offtake (tonnes) Lemetco GMBH, Germany December 18, 2007 25,000 of FeMn and SiMn Lux Alloys SA, Luxembourg December 18, 2007 25,000 of FeMn and SiMn
The project cost of Rs 555.32 crores includes
provision to enhance capacity of furnaces from 13.5 MVA to 18 MVA each to produce Silico-Manganese at a marginal cost of Rs. 67.50 lakh per furnace.
Cost of setting up a sintering plant.
Cost of a 220 KV/33KV substation
Cost of the project excluding these cost components and cost of land is Rs. 2.54 crores per MVA of furnace capacity, which is comparable to that of various ferro alloys projects in the planning and execution stage.
The project cost is proposed to be financed at a debt equity ratio of 2:1. The proposed components of financing are
The promoters propose to bring in their equity through their investment companies by liquidating investments.
Value of total investments => Rs 152 crores
Amount already brought in by promoters => Rs 19.75 crores
The majority shareholder (51%) of Comang Mining, South Africa, with whose nominee GFPL is entering into long-term agreement for supply of Manganese ore, is agreeable in principle, to subscribing 20-49% of GFPL’s equity subject to ongoing due diligence.
Ferro alloy - used in the production of steels and alloys as a raw material.
most widely used Ferro-alloys are Ferro-chrome, Silico-manganese and Ferro-manganese
used as de-oxidizing agents and also added as an alloy to improve the wear resistance and corrosion resistance properties of steel
the average percentage of Consumption for period 2005-06 and 2006-07 compared to 1 unit of Steel is
FeMn is 0.60%
SiMn is 1.31%
Ferro Alloy Industry is hence dependent on the Steel Industry for its demand and growth.
The overall production of Ferro Alloys in India 2.00 million tonnes in 2006-07 as compared to 1.65 million tonnes in 2005-06, registering a growth of 21.21 %
According to CRISIL Infrastructure Advisory, there is a demand supply gap in the industry
Need to increase manufacturing capacity of manganese alloys in the medium term by 10-15% (1-1.5 million tpa).
Ferro Manganese prices have largely been dependent on the steel price movements
FeMn Prices reached a high in 2004 and dipped again in 2005
Historically, the SiMn prices have been 10% higher than those of FeMn
Most widely consumed metal after iron, aluminium and copper
About 95% of manganese is used in Steel Industry in various forms
Manganese ore is the most vital raw material used in the production of FeMn & SiMn
Gaurav Ispat Alloys Limited (GIAL) has been producing export grade Fe-Mn with siliceous chips consistently for last one year with the following parameters
However, the company proposes to use conventional manufacturing process with 50% lumpy ore and 50% sintered manganese fines. The company is also entering into a long term contract for supply of lumpy manganese ore
Requirements for Export grade Fe-Mn Achieved by the company Mn (Minimum) 75.00% 76.00% P (Maximum) 0.25% 0.22% Si (Maximum) 1.50% 1.20% S (Maximum) 0.03% 0.02% C 6 TO 8 % 6 TO 8 % Size 10 - 50 mm 10 - 50 mm
International buyers backing out of the deal
Failure to get supply of Manganese Ore from Comang Mine, South Africa
Using of silicious chips - 11 mm against normal size of 75 mm