Scripscan:Kalyani Steels Ltd
cmp:108
Code:500235
Story:Kalyani Steels, a part of the Kalyani Group, is a small speciality steel producer.There are three aspects of Kalyani Steels’s business that deserve attention. Kalyani Steels is not into the commodity steel business. The plant makes carbon and alloy steels for the forging industry and the automobile sector. Most important, Kalyani has captive iron ore mine leases in Bellary with reserves that will be sufficient for at least 15 years. It is also in the process of acquiring its own iron-ore mines with reserves of around 2mn-3mn tonnes. This access to iron ore is the key to its global competitiveness, since the iron ore price now accounts for almost 20% of the price of finished steel and is slated to rise further. Kalyani Steels also has access to coke and power with a 40% stake in Gujarat NRE Coke’s 0.325mn tpa coke plant at Dharward, and 8MW power plant.The core business should grow by about 15% for the next two years.About four years ago, Kalyani Steels got into an agreement with SJK Steel, a loss-making integrated alloy steel plant making speciality steel in Andhra Pradesh with a capacity of 275,000 tonnes per annum. The capacity of this plant would be increased to 1.6mn tonnes of finished steel in the next few years. The Gerdau Group is a Brazilian steel company that is currently the 14th largest international steel producer.This project can be a big booster.All said and done it looks a safe buy at slight lower levels.
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Thursday, August 13, 2009
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