"This year, our turnover will rise in a big way as the benefit of capital expenditure undertaken over the past five years to expand capacities by leveraging around $5 billion against the put option by Vodafone comes into play. The fruits of those investments are now all set to be realised," said an official who closely works with the Ruia family.
Essar group chief executive Prashant Ruia confirmed the projections to Financial Chronicle. "The focus of the group over the next two to three years would be to consolidate business and stabilise and ensure that the projected cash flows are realised," he said.
"Our domestic steel-making capacity has almost doubled to 10 million tonnes per annum while that of power is scheduled to double this year. In our oil business, both capacity and complexity of the refinery are up. In our ports business too, capacity is up. So we expect to increase our group turnover significantly," Neeraj Gupta, executive director of Essar group, told Financial Chronicle.
Nayyar expects revenues from the refining business to rise 35 per cent once the benefits of the expansion are realised this quarter.
An Essar group spokesperson said capacity in the domestic steel business had expanded from 4.6 million tonnes per annum (mtpa) to 10 mtpa. This would help the company achieve a turnover of around Rs 35,000 crore.
It is also expected to commission a 6 mtpa pellet-making plant at Paradip in Odisha this month, using low-grade iron ore fines. This will take the group's total pellet-making capacity to 14 mtpa. A further 6 mtpa expansion of pellet making capacity in Odisha is being planned later.
"The benefit of the complete steel capacity for the full year will be available only in 2013-14. Further capacity expansion in the petroleum refinery to 20 mtpa will happen in September this year," the Essar official said.
Recently, Naresh Nayyar, chief executive officer of Essar Energy, said its power capacity would increase from 1,600mw to 4,510 mw in 2012-13. The first unit of 600 mw Salaya 1 commenced commercial operation earlier this month, while the second unit, also of 600 mw, has been synchronised with the state transmission grid and is expected to start commercial production in May.
Salaya is one of three power projects due for commissioning this year, the others being the 1,200 mw Mahan I project and the 510 mw Vadinar P2 project. Together these three projects will add 2,910 mw to the existing capacity of 1,600 mw, said a recent press release by Essar.
Essar is also expanding the capacity of its ports to 104 mtpa from 88 mtpa at present, the Essar spokesperson added.
Ruia said his group would focus on deploying adequate marketing staff and channels to sell the increased output at remunerative prices in a cost-effective manner. "We will see how effective this preparation has been this year when the ramp-up happens across our different business segments," he said.