In the present work, an effort is made for best utilization of waste heat to reduce energy requirements in sponge iron plants. For this purpose, based on the principles of process integration, three design modifications, scheme-1, scheme-2, and scheme-3, are proposed and applied on actual data of two sponge iron plants being operated in India. Scheme-1 accounts for preheating kiln inlet streams using waste gas exiting ESP and cooling kiln outlet using same ESP exit gas. However, for scheme-2, initially the kiln outlet is cooled using kiln air and further kiln inlet streams are preheated using waste gas exiting ABC. Scheme-2 with power generation is considered as scheme-3. To compute the coal demand of the proposed schemes, a modified model is developed based on heat of reactions, feed preheating, sensible heat, radiation losses, etc. Efficacies of schemes are computed while comparing results of these based on economic analysis. Savings in coal and water and hence reduction in waste gas generation, obtained in scheme-2, are found greater than that of scheme-1 as well as various design modifications reported in literature. Hence, scheme-2 is selected as the best possible design for sponge iron plants, proving process integration to be an important tool to save energy in these plants. However, for plants without a power generation unit, scheme-3 can be considered as best design.