Sesa Goa has embarked on expansion spree with a Sales volume target of 25 mn tonne of Iron Ore by FY11. The company had clocked 12 mn tonne for FY08 and 4.64 mn tonne for H109, the idea of the company missing its targets (about 15 mn tonne) for FY09 looks to be closer to reality in current inclement scenario of flagging Chinese demand which looks to be worsening next year. The Chinese demand for Iron ore had risen 18% for CY07, 16% for CY08 and we assume the growth to drop to 2% for CY09. We have assumed a sale of approx. 12 mn tonne and 13.3 mn tonne for FY09E and FY10E respectively, despite the odds and the price cuts.

Secondly, Sesa Goa is mainly into an export of low grade Iron ore i.e. less than63.5% Fe content, which is a draw back- qualitatively.

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