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Ispat promoters to infuse Rs. 230 crore for expansion

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REDUCING DEBT:Ispat Industries Chairman Pramod Mittal (left) with Executive Director (Finance) Anil Sureka at the extraordinary general meeting of the company in Kolkata on Saturday.
REDUCING DEBT:Ispat Industries Chairman Pramod Mittal (left) with Executive Director (Finance) Anil Sureka at the extraordinary general meeting of the company in Kolkata on Saturday.

To part finance three upcoming projects in Maharashtra

Rs. 1,700-cr investment envisaged

Coke oven plant to become operational by March 2012

KOLKATA: The promoters of Ispat Industries would infuse Rs. 230 crore into the company by subscribing 5 per cent of its equity capital to help it part-finance three upcoming projects in Maharashtra.

The Pramod and Vinod Mittal-controlled Ispat Industries also got shareholders' approval on Saturday to raise up to Rs. 500 crore through qualified institutional placement (QIP) and preferential allotment to promoters.

The QIP proceeds would be used to retire debt.

“The promoters will subscribe 5 per cent equity in Ispat Industries at a price not less than Rs. 20.58 a share. This price translates into a total infusion of Rs. 230 crore,” Ispat Executive Director Anil Sureka said. Total investment in these three projects is about Rs. 1,700 crore, but Ispat would not raise any fresh debt to roll them out, Mr. Sureka said, adding, “Except mining, since power and coke oven plants are being executed through separate companies. So we will not add any fresh debt.” Mr. Sureka also said that Ispat would secure 100 per cent of coke, 40 per cent of power and 50 per cent of iron ore needs at market-linked prices.

For the Rs. 1,100-crore one million tonnes annually coke oven plant at Dolvi in Maharashtra, the company would invest Rs. 100 crore for a 26 per cent stake, while the balance will be held by a foreign partner.

It is expected to be operational by March 2012. The second project is the 110-MW captive plant at Dolvi being set up by subsidiary Ispat Power, which will be executed at a cost of Rs. 490 crore.

The third project is for part financing a Rs. 120-crore iron ore mine development project in Maharashtra.

Debt repayment

Mr. Sureka said the company would repay debt between Rs. 700 crore and Rs. 750 crore annually to reduce its existing overall debt of Rs. 6,700 crore. In 2009-10, it repaid Rs. 1,000 crore in loans.

Ispat hopes to up the EBITA (earnings before interest tax and amortisation) margin to 30 per cent by 2012-13 from the current 20 per cent. — PTI


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