Everest Kanto plans to double capacity

Everest Kanto Cylinder Limited (EKC), the country's largest manufacturers of gas cylinders, is set to double its manufacturing capacity to 7 lakh cylinders. The company is setting up a green-field manufacturing facility for high pressure gas cylinders in Gandhidham.

In order to fund its capacity expansion, the company has announced an initial public offering. Of the total requirement of Rs 106 crore part will be funded by the issue, and part by a rupee term loan. The company intends to deploy the entire proceeds of Rs 90 crore from the issue for part funding of the proposed project at Gandhidham.

The reasons cited for choosing this region include the proximity to ports to facilitate exports, and the excise and sales incentives offered in Gujarat that provide incentive to set up manufacturing facilities in the state.

The company has also entered into a joint venture with Cangzhou Gas Corporation in China, where it holds a 65 per cent equity stake. In the next three years, the company plans to expand its manufacturing capacity to 500,000 cylinders in China and operations are expected to begin in December 2007.

P K Khurana, chairman and managing director, EKC, said, "EKC has established itself as a leading player in high pressure gas cylinder segment and with the ongoing expansion at Gandhidham, the capacity will be close to double. With the expansion plans on schedule and growing demand for both industrial and CNG cylinders, EKC is well poised for exponential growth."

The price band has been fixed between Rs 140 and Rs 160, and the final price of the equity shares of Rs 10 each for cash at a premium that would be determined through the book building process.

The company already has a capacity of 3.66 lakh cylinders, in Aurangabad, Tarapur and Dubai and expects to increase its capacity to 1.5 million cylinders, in order to become globally competitive.