ESL rolled 472,600 tonne of hot rolled coils (HRC) in the first quarter which is 31.1 per cent higher than the 360,281 tonne rolled in the same period of last year. Production of liquid steel stood at 473,600 tonne, an increase of 29.7 per cent year-on-year (YoY) on 364,900 tonne produced last year. Sales and despatch were also significantly higher at 414,800 tonne, a growth of 26 per cent YoY over 329,800 tonne despatched in the year earlier.

Of this, exports have logged a significant rise of 69 per cent at 204,300 tonne, against 120,800 tonne. Domestic sales have been 210,500 tonne, a marginal rise of one percent over 209,000 tonne in the previous year.

Power consumption, a key cost component in steel making, has also significantly come down. In the first quarter of fiscal 2000-01, average power consumed per tonne of steel produced was 599 kWh, which according to sources at Essar is an all time record. In the comparable quarter last year, power consumption per tonne of steel produced was higher by 94 kWh at 693 kWh per tonne of steel produced.

Sponge iron production was also higher by 21.3 per cent at 470,500 tonne, against 387,900 tonne produced last year. Company sources add that sponge iron production in this quarter was only 1,000 tonne less the all time record.

ESL's business plan envisages steel production in the current fiscal at 2.2 million tonne (mt) with exports of 1.1 mt and domestic sales of 1.1 mt. Company sources add that the most significant factor, for the company's continued good production performance and efforts to lower costs, is the regular availability of gas on a long term basis. The sources add that presently the company is supplied 2.9 million cubic meters (mcm) of gas per day and to operate at a production level of 2.4 mt of steel per annum, their requirement of gas would be approximately 3.16 mcm per day. Gas is used as a reduntant in the sponge iron making process and is also used for generating power, where it is more cost competitive than liquid fuels such as naphtha.

ESL is also in the midst of restructuring its debt. It is planning to retire some high cost debt by selling of certain assets that it has and also extending the maturity of loans.

It is working on extending the maturity of its loans by another five years and has spoken to all its lenders in this regard. Company sources add that if everything goes according to plans and if prices of HRC stay in the $290 to $330 range, then it is likely that ESL will show a net profit at the end of this fiscal itself.