Monnet Ispat to merge power arm

Monnet Ispat - the Chattisgarh based sponge iron manufacturer is planning to merge its power arm Monnet Power with itself. The board of Monnet Ispat will consider the proposal for the merger on 13, December.

Ajay Bhat, chief financial officer, Monnet Ispat told Business Standard, "Since there are operational synergies between the two companies, the lenders felt that the two entities should be merged into one,. Monnet Power has recently completed its capacity expansion to 45 MW, and is targeting a turnover of around Rs 100 crore in the coming year.

The turnover of the merged entity is targeted at around Rs 300 crore. "The demand for steel has been rising consistently and the prices are also firming up globally, therefore we expect the turnover to be very good this year," Bhat said.

The company clocked a turnover of around Rs 184 crore in the financial year 2002-03, from its sponge iron and steel division.

"We had setup the power company in 1998 keeping in mind the requirements of our sponge iron business. At that time, the steel industry was not doing well, therefore we decided to float a separate company to insulate it from the steel business," Bhat said.

The turnaround in the steel industry has propelled the company to consider the consolidation of the power division, he added.

"We are hoping to complete the merger by the end of this financial year," Bhat said. The board will also consider the swap ratio as well as appoint consultants on Saturday.

Monnet Ispat has also embarked on an expansion plan to increase its existing capacity to 4.4 lakh tonne per annum. The commercial production should begin by March 2005, Bhat added.