NEW DELHI, November 21: Essar Steel Ltd, the flagship company of the Rs 14,000 crore Essar Group, is planning to set up a hot-skin pass mill by the beginning of next financial year.

Essar Steel managing director J Mehra told The Financial Express that the financial details of the project are being finalised.

The company also plans to set up a cold roll mill in the next five years, he said.

On the sources of funds for implementing the company's future programmes, Mehra said the company has a sanction for raising an ECB worth $180 million. "However, given the reduction in the interest rates in the domestic front, the company may not raise the entire amount as ECB," he added.

On the difference in the project cost as mentioned in the company's prospectus and last financial year's audited account, Mehra said the comparison is not fair as the original project was supposed to have only an hot rolled coil plant. "Now it includes a pellet unit and downstream projects consisting two sitting lines-a light gauge shear line and a heavy gauge shear line," he added.

On the operating margins, Mehra said the company expects to continue with a margin of 35 per cent over the next few years. He said in order to maintain the margin the company will try and control the cost by $30 to $40 per ton over the next five years. "The effort will be to cut our cost by 15 per cent in the current financial year," headed.

The strategies that Essar would adopt in order to lower its cost involve lowering of power consumption and cost of power. The company will also try to increase its yields, reduce consumption of refractories and lower the material inputs in the long run. "For this the we are planning to install a blast furnace at Hazira," Mehra said.

On the overall corporate structure of Essar Steel Mehra said his efforts will be reduce the clusters from the existing 22 to eight for decentralisation of control so that company's plans can be implemented faster.

On the overall situation in the country's steel industry, Mehra said the margins will not be affected so long as there is no over capacity in the country. "However, the biggest concern now is the dumping by the foreign countries", he added.

Foreign countries, especially the CIS countries, are selling selling at a price which is lower than the prevailing price in the domestic markets by $90 to $100. "Till the anti-dumping duty is strengthened, the industry will continue to face problems", Mehra said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.