May tap private equity for expansion
The Surya Group of Companies is planning major investments, including setting up a steel and cement plants along with a power plant, in Karnataka. The company had said it is looking at various funding options, one of which could be private equity (PE). Besides, the group is also investing Rs 100 crore on pipe and bulb plants in the state.
Arvind Bansal, deputy managing director (operat-ions and corporate management), Surya Roshni Ltd told Business Standard, the company is planning a steel plant with a capacity of 6 million tonnes per annum in Karnataka.
“Slag, a by-product of steel making, is difficult to despatch from the proposed steel plant. However, this can be can be a raw material for cement. That is how idea of a cement plant came up,” said Bansal. The company is planning a cement plant with a capacity of four million tonnes per annum.
To support both plants, the company plans to set up a power plant with an initial capacity of 100 mega watt. The plant will mainly be a captive plant, and the excess power will be sold in the market, said Bansal.
Commenting on the investment, he said, the total outlay for these projects would be around Rs 25,000 crore and it would take three to four years to commence.
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Asked if the company would look at any PE investment, Bansal said, “We are evaluating avenues to fund the project, one of which could be PE.”
Besides, in Shimoga district, the company is investing around Rs 100 crore for setting up a pipe plant with a capacity of around 100,000 tonnes per annum and a bulb plant.
Both the plants are expected to go on stream by the beginning of next fiscal and likely to generate around Rs 500 crore of revenue in the next two years, said Bansal.
He noted, the group had set a target to reach Rs 5,000 crore turn over by end of 2012 from the current around Rs 2,000 crore. Pipes business contributed Rs 600 crore of the total turn over and remaining was from pipe business.
“Our focus and presence has now become regional. We invested Rs 500 crore, recently to set up manufacturing facilities in Gujarat, Haryana, Madhya Pradesh and now in Karnataka,” he added.
All these units will take care of each region and it will give boost to our turnover.”
By setting up new facilities the company had expanded its capacity to five lakh tonnes per annum from the two lakh tonnes, said Bansal.