Uttam Steels in Rs 250 cr spread plan

The Mumbai-based secondary steel producer Uttam Galva Steels has scripted a Rs 250 crore expansion plan.

Under the plan, the company will double its cold rolling capacity to 1 million tonne per annum, hike its galvanising facility to 7 lakh tonne per annum and set up a manufacturing facility for colour-coated sheets.

Company executives said, "We have already upgraded our cold-rolling (CR) capacity from 2.5 lakh tonne to 5 lakh tonne. By March 2005, the CR capacity will stand enhanced to 7.5 lakh tonne, and by March 2006 we will have an installed capacity of 1 million tonne per annum."

The expansion project envisages increasing the company's existing galvanising facility from 4 lakh tonne per annum to 7 lakh tonne per annum.

The company is also looking at setting up a unit for manufacturing 80,000 tonne per annum of colour-coated products. The company is looking at raising Rs 150 crore to fund this expansion project, while the balance will be generated through internal accruals.

"We are looking at raising around Rs 100 crore this year and Rs 50 crore next year. The loan will be a mix of foreign currency and rupee debt," senior company officials said.

The company currently has a debt equity ratio of 2:1, with an outstanding debt component of Rs 290 crore. "We have recently converted our high cost debt into low cost forex loans," company executives said.

Around Rs 210 crore of the debt portfolio is in foreign currency, while the balance is rupee debt, they added.

Meanwhile, the promoters of the company are also looking at consolidating their stake in the company from 45 per cent to around 60 per cent through a preferential allotment of shares.