Kirloskar Ferrous Industries Eyes Cost-Cutting Through Green Energy After ISMT Merger

Kirloskar Ferrous Industries Ltd. is aiming to reduce its operating costs with a shift to green energy, following its merger with Indian Seamless Metal Tubes Ltd., Managing Director R V Gumaste said.

Kirloskar Ferrous Industries and its subsidiary, Indian Seamless Metal Tubes, completed their merger in August. Before the merger, ISMT had installed a 35 MW DC capacity solar plant worth Rs 138 crore in Maharashtra. The total capacity of the plant is 70 MW DC.

Talking to NDTV Profit, Gumaste said the shift to green energy through ISMT will substantially impact the margins as the company looks for opportunities to cut costs.

“Currently we are at a power and fuel cost of 15-16%, and we intend to take this down to 6-7% over the next two to three years,” he said.

The company was not looking only at cost-cutting goals, Gumaste said.

“We have a huge commitment to going green and reducing carbon emission, and to take this steel business to green steel manufacturing,” he said.

The top executive noted that by the end of this calendar year, Kirloskar Ferrous Industries would have installed 100 MW of solar power capacity.

“We have already started investments in wind power as well because these are complementary. In monsoon, we generate more wind power and less solar power. We would like to bring that blend, so that we increase our share of green energy in the total energy consumption in steelmaking,” he explained.

Kirloskar Ferrous Industries is seeing alignment in its pig iron production volumes in second and third quarters, after facing a setback in the first quarter, Gumaste noted. However, it is not following the 1.5 lakh metric tonnes production guidance it had given earlier.

“The 1.5 lakh metric tonne production sales now includes the sale to the ISMT steel plant. Our external sales of pig iron today is in the order of 43,000 mt per month," Gumaste explained.

He further said merging ISMT with Kirloskar made good sense and the company was looking at more integrations ahead.

“We are looking at complete integration, and bringing the value chain, starting with iron ore mining and going up to the seamless tubes,” the managing director revealed.

Shares of Kirloskar Ferrous Industries Ltd. gained over 1.5% on Monday to touch an intraday high of Rs 690 apiece on the BSE. Around 12:40 p.m., the stock traded at Rs 670.4 apiece, down by 1.35 % from its previous close of 679.55 on the BSE

Earlier in September, JM Financial had put a ‘buy' call on the stock with a target price of Rs 760 per share.