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Investment Rational
MSP Steel and Power Ltd (MSP) is focusing on backward integration/expansion and substantial savings are expected. It has planned a capex of Rs.815 crores for increasing capacities. MSP has low cost advantages of captive production of raw materials, benefication, captive power use and Railway siding.
MSP will save on raw materials cost upon operationalisation of its 26 mn MT coal mine and 35 mn MT iron ore mines (Expected commencement of operations Coal mine - By end of 2012, Iron ore Mine – By 2015).
Post expansion of the total 76 MW , MSP will require only 34 -36 MW. MSP will have the opportunity for increasing its sales and profits from merchant power sales of the balance surplus power available. MSP also applies fungible model wherein it can swap billet production by selling merchant power in cases where producing billets is not feasible.
MSP has reported impressive financials for April - December 2010. Overall in the period April – December 2010 its Net Sales have increased by 19 % , Operating Profit has increased by 64 % and its Profit after tax has also increased by 144% . There has been good increase in its margins also.