BIHAR SPONGE IRON

BIHAR SPONGE : BSE SCRIP CODE 500058

Bihar Sponge is a joint sector company which was loss making. The share price has been hitting circuits of late and is now hovering around Rs.53.00 levels. I am appending the latest news item regarding the company :

QUOTE :

Umesh Modi, one of the promoters in Bihar Sponge Iron Limited (BSIL) has bought out partner DEG's 5.5 million shares (8%) in BSIL and with this acquisition, has increased his share in the company to 62%. Mr. Modi initially held 54% stake in BSIL. Bihar Sponge Iron Limited (BSIL) is a joint Sector partnership with the State Govt. of Jharkhand and was the very first coal based commercial sponge iron plant in India, which commenced operations in 1989. The Chief Secretary of State of Jharkhand represents the Board of the company and the Chairman is a nominee from State Govt. of Bihar (BSIDC). The ailing sponge iron plant had suffered financial setback in the initial years of operations on account of unprecedented devaluation of Rupee in early 90's and also on account of sudden reduction in import duty on scrap was restructured in the year 2004 by BIFR. The FI's and Banks waived a sum of Rs. 2880 million and promoter Mr. Umesh K Modi contributed Rs. 325 million by way of equity and the state government of Jharkhand provided a soft loan of Rs. 325 Million to the company's restructuring.

The company has since then come a long way, and has upgraded and modernized the plant besides increasing its capacity from 500 TPD to 700 TPD from additional contribution of Rs. 400 million by way of unsecured credit from Modi's. As a result the company has been able to turn around from the last quarter of Year 2006-07. The Govt. of India, on recommendation from State Govt. of Jharkhand has approved the allotment of 408 hectares of Iron Ore Mine to BSIL. The company sources indicate that the company is confident of completing the development work of the mine within next 3 years. The company sources also indicated a decline by about 30-35% in the cost of iron ore subsequent to the excavation of iron ore from the captive mine. Mr. Umesh K Modi is satisfied with the progress of the company and is extremely aggressive of the future plans and expects that the Coal Blocks would be allocated to the company to meet the growth plans.

UNQUOTE

So, the company is moving in the right direction and appears to be a multibagger. Please use your discretion and invest.