B Satish Kumar, Managing Director of Steel Exchange India (Seil) expressed hope that the firm may achieve financial closure for its proposed Rs 300-crore pellet plant by three-four months.
He said the company is awaiting environment clearance for the proposed 600,000 tonne capacity unit which would come up at its existing steel plant and would help it cut production cost.
The firm plans to borrow Rs 200 crore from banks for the project and the remaining amount would be raised from promoters as equity.
The company operates a 300,000-tonne capacity integrated steel unit in Kothavalasa in Andhra Pradesh.
The company is setting up the pellet plant in order to reduce its dependence on iron ore lumps as availability of the latter is scarce.
The proposed plant would convert iron ore fines, which is available easily, into pellets and use them for making steel rather than using iron ore lumps. This would reduce steel production cost by 15 per cent, he said.
Of the total production from the proposed plant, about 300,000-tonne will be used by its existing steel unit and the remaining will be exported to other countries.
The company has also set up a 60-mw captive power plant. It expects to produce 200,000 tonne steel this financial year and 300,000 tonne in the next fiscal.