KIOCL Limited – Constantly Making the Country Self-reliant

Indian Economy & Market reached out to its Chairman & MD Mr. SK Gorai to understand the probable outcome of the recent government announcements, some directly affecting the company and its future plans. As a result, the stock of the company has already attracted the attention of long-term investors. A Chartered Accountant with a degree in Finance & Strategy, Mr. SK Gorai has 33 years of diversified, multi-country, inter-functional experience in eleven large CPSU, private, and MNC companies.

Written by: IE&M Team

Published on: 22/08/2021

KIOCL Limited is a pioneer in iron ore mining, beneficiation, and iron–oxide pelletization in the country. Established in 1976, as Kudremukh Iron Ore Company for mining and beneficiation of low-grade iron ore, it is now a Mini Ratna Category I PSU. The renamed company has been continuously making a profit and paying dividends to its investors.

With facilities to operate 3.5 MTPA iron-oxide pellet plants, blast furnace unit to manufacture 2.16 lakh tonnes per annum pig iron, it has contributed richly towards making the country self-reliant. The company is producing both BF and DR-grade pellets with excellent chemical and physical specifications to suit Blast furnaces and direct reduction plants. One of its big achievements had been the successful commissioning of the beneficiation and pellet plant of NMDC on an O&M basis. This initiative has given it an edge.

“Continuous efforts to go for higher volumes in order to improve capacity utilization”

– Mr. SK Gorai, Chairman & Managing Director, KIOCL Limited

KIOCL – At a Glance

BSE Code: 540680; NSE Code: KIOCL

A debt-free company with zero promoter pledge
Registered YOY growth in Operating Profit
Registered YOY increase in operating margins
Net profit margins increased – quarterly & TTM basis
Increasing growth in Revenue & profit every Quarter
Recorded Highest Recovery from 52 Week Low

Please elaborate on the kind of crisis you faced and what has been the impact of COVID and Lockdown?

Like any other business concern certainly for us also it was not a good time. First of all, our paramount concern was to keep the employees in good health, by following all the Covid-19 appropriate behavior and protocol prescribed by the Ministry of Health from time to time. Due to lockdown, there was a disruption in the logistics. You know the Company has no Captive Mines. We have to source Iron ore fines from long-distance i.e. from the State of Chhattisgarh. It is brought to our Pellet Plant at Mangalore. Other input additives like Bentonite, limestone, coke fines, etc., also have to be sourced from different parts of the Country. During lockdown across the nation, we had to face challenges to maintain the production line. However, by reorganizing our resources and continuous interaction with the Vendors and also at times, relaxing other terms and conditions of the purchase orders, we could maintain the production line, and consequently, we could achieve production targets with a minimum disruption arising out of Covid-19.

The Company has a rich legacy and has engaged in various activities; let us know the journey so far?

KIOCL has a rich legacy. The Company is successfully operating for more than four and half decades. During 1980 – 2006 it was running 7.5 million tonnes mines. However, with the Supreme Court verdict banning commercial activities inside the Kudremukh National Park, we had to suddenly stop mining activities. As the Company, did not have any other alternative mines, we realigned our pellet plant at Mangalore and converted its technology for processing Magnetite ore to Haematite ore. For the last 10 years, the Company is operating by resourcing material primarily from Bacheli, Kirandul in the state of Chhattisgarh, through long-term purchase arrangements with NMDC. So, these 15 years of survival was a quite bit of a challenge and due to sourcing of iron ore fines as well as the volatility of the prices, surplus manpower, the Company could not operate confidently with long-term sustainability.

Now, with manpower strength reaching the optimum level, the Company is in a position to leverage its expertise in producing high-quality pellets and with satisfactory prices selling with confidence to cater to the need of the International market both to China and other places like the Middle East, Europe, etc., During last one year, the Company has got good pellet prices. Now subsequent progress has been made in getting the statutory clearance for Devadari Mines, which has been allotted by the Government of Karnataka on a nomination basis. So at present, the Company has got back its full confidence and now looking forward to march towards a bright future.

The Union Government gave stage I approval for mining in Devadari Hill Range. When mining will start?

It all depends upon the Stage II clearance which is expected by end of this year. The government accorded us in principle, Stage-1 FC approval on June 24, 2021. This approval is for diversion of forest land in Swamimalai (SM) Block Forest at Sandur Taluk of Ballari District for Iron and Manganese Ore Mining in Devadari Hill Range in favor of KIOCL. Now we are in the process of complying with the conditions of Stage I approval. On obtaining all statutory clearances as envisaged by Govt. of Karnataka, the company will execute the Mining Lease Deed with Govt. of Karnataka. It is expected that we will commence the mining operation at Devadari Iron Ore Mine during the 2nd quarter of FY 21-22.

Can you quantify the amount of ore that would be available after this and how long it will last?

We are expecting around 30-35 million tons of iron ore in this deposit for mining, which will suffice for around 20-25 years of mines life. I think that is huge.

Hopefully, with this, you are going to be a big job giver.

Unlike any private sector company, for a CPSU new projects are envisaged to create employment as well as the development of the country. This Devadari Project will also follow the same philosophy. We are sure that the project will deploy around 500 persons directly and provide indirect employment of around 1200 persons. With this huge generation of employment, the project will play a big role in changing the socio-economic condition of the local area.

The company was supposedly trying to start mining in Swamimalai forest block and set up a beneficiation plant. Please share the progress on this front.

We envisaged a 2 mtpa Crushing, Screening, Conveying and Beneficiation plant along with mining activities. The work is in progress and on the execution of the mining lease deed and commencement of mining activities at the site, this work will also commence simultaneously.

Elaborate on your future plans?

First of all, we are making continuous efforts to go for higher volumes in order to improve our capacity utilization so we can earn huge foreign exchange through ‘Make in India’ initiatives. Under the aegis of this, Pellet Plant is also being used as a tolling plant to optimize the production capacity by converting imported iron ore and concentrate into pellets. Secondly, we have already taken exploration work for minerals under National Mineral Exploration Trust and allocated by the Government of Karnataka & Tamil Nadu. We’ll have a permanent railway siding and bulk material handling at Mangalore when Devadiri mines start their production. However, the list doesn’t end here since we have entered green energy through setting up solar power plants for captive purposes.

Topics you may be interested in: iron ore , karnataka , KIOCL Limited , make in india , Mangalore , mining , SK Gorai

About the author: IE&M Team

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