Jai Balaji seeks coal, ore mines

The group is gearing up for its first IPO; more than one firm may hit market

Steel maker, Jai Balaji group, has applied for coal and iron ore mining leases, for backward linkages.

Aditya Jajodia, managing director of the Jai Balaji group, said the group had applied for coal leases to Mahanadi Coalfields Ltd (MCL), Eastern Coalfields Ltd (ECL) and Central Coalfileds Ltd (CCL).

Iron ore applications were pending with Orissa and Jharkhand governments.

The group's total coal requirement, at present, was around 8 lakh tonne, which would go upto 4-5 million tonne in five years' time. Iron ore requirement, currently at 6 lakh tonne was expected to increase to 1.8-2 million tonne in five years.

The group had lined up several expansion plans, which would increase the turnover to Rs 4,000 crore from the current level Rs 650 crore.

One of the major projects was being pursued by Shri Ramrupai Balaji Steels Ltd, a Jai Balaji group company.

Ramrupai was setting up an integrated steel plant at Durgapur to cater to a growing steel market. The total cost of the project was around Rs 1,200 crore, which would span over a five-year period.

The first phase of the project has been completed and the company has commissioned facilities to manufacture sponge iron and pig iron and also a rolling mill.

The company had now embarked on its second phase and was now setting up facilities to manufacture MS billets, 40 Mw captive power plant and a coal washery plant.

The total investment in the second phase would be to the tune of Rs 277 crore, a part of which would be financed by way of an initial public offering (IPO). Ramrupai has already Securities and Exchange Board of India (Sebi) clearance for the project.

Jajodia said, on the installation of the captive power plant, substantial savings in cost will arise. Power costs will slide from Rs 2.60 a unit to about Rs 1 over four years. Moreover, fiscal incentives in the form of income tax benefits would help lower overall costs.

Jajodia said, the project would be financed through a mix of IPO, equity and debt. Term loans amounting to Rs 181.09 crore and regular working capital facilities of Rs 20.36 crore have already been sanctioned.

Jajodia said, "We are strategically located in West Bengal, with its neighbouring states (Orissa, Jharkhand and Chhattisgarh) has rich reserves of raw materials.

The company sells TMT bars under the brand name "Balaji Shakti" in these markets.