Tata group company Tata Sponge Iron Ltd (TSIL) is on the prowl and is looking for acquiring sponge iron plants.

Talking to Business Standard at the sidelines of a seminar on ‘Sponge iron industry growth and opportunity’ organised by the Indian Institute of Metals and Steel & Metallurgy Journal, the managing director of TSIL, Ashok Pandit, said, "We intend to take over companies that are in the red and are incurring losses or have defaulted on their debt repayment to institutions. We intend to take over these non-performing assets from the institutions or from asset reconstruction companies (ARCs)."

Pandit said there were several such companies. These were likely to be put on the block by the institutions and TSIL would aim to take over some of them.

TSIL’s growth in installed capacity will come partly through such acquisitions. Pandit said it will take over plants with manufacturing capacity of 300 ton a day at the least, for that was the economical size.

TSIL will also expand the sponge iron manufacturing capacity of its plant by installing a third kiln for Rs 70 crore.

The proposed project will be funded by borrowings and retained earnings. The groundwork for the project began in April 2003 and the plant was expected to be commissioned by March 2005.

This expansion will see the plant capacity increase by 62 per cent to 390,000 ton a year from 240,000 tonne and will help the company to further consolidate its position as the largest supplier of quality sponge iron in east India and the second largest coal based sponge iron plant in India.

The plant has already been declared as the producer of best quality sponge iron by consumers, according to a feedback survey conducted by an external agency.

Pandit said coal-based manufacturers were all set to see a capacity increase to 26 million ton from 10.64 million ton in three years. He said demand in the segment coupled with shortage of scrap has pushed up prices of sponge iron to Rs 12,000 a ton from Rs 5,000 a ton in a short period. TSIL is looking for organic and inorganic growth to cater to increased demand, he added.