VISA Steel Limited Annual Report 2007-08

integrating the value chainWith China emerging as a stainless steel huba strategic alliance withBaosteel was the next stepIndia is a major exporter of chrome ore and chromeconcentrates to China with over 1 million TPAexports over last 4 years. The Government of Indiaencourages value addition of ore within India byimposing export tax on exports of chrome ore andconcentrates. Over time, India shall emerge as a largeexporter of ferro chrome instead of chrome ore.China accounts for 25% of world’s stainless productionthereby emerging as a large buyer of chrome ore andferro chrome. Baosteel, one of the largest stainlesssteel producers in China has been a buyer of VISAComtrade’s chrome ore for several years. VISASteel signed a joint venture agreement with BaosteelResources Co. Ltd. and VISA Comtrade AG to seizethe opportunity in value addition of chrome ore intoferro chrome. The Joint Venture Company, VISA BAOLimited, will set up a 100,000 TPA Ferro Chrome Plantin Orissa having a capex of Rs. 2,600 million and adebt equity ratio of 65:35.VISA Steel, Baosteel and VISA Comtrade AG eachrespectively hold 51%, 35% and 14% stake in VISABAO Limited. The ground work for this project is set tobegin by October 2008. On commissioning, VISA Steeland VISA BAO put together will be one of the largestFerro Chrome producers in India. A majority of thetotal ferro chrome production will be sold to Baosteel.Baosteel’s immense market credibility and theadvantage of having a ready customer for enhancedproduction will help improve VISA Steel’s profitmargins.The union between Baosteel and VISASteel will offer advantages of scale andde-risked investment.on commissioning, visa steel and visabao put together will be one of thelargest ferro chrome producers inindia.Annual Report 2007-0813