Godawari Power to float IPO of Rs 190 cr

Godawari Power and Ispat Ltd (GPIL) is planning to raise Rs 190 crore from the capital markets for the expansion plans of the company.

The capital is expected to be raised through a mixed route of debt and initial public offering (IPO) or even fresh infusion of equity in the company.

Raipur-based GPIL currently manufactures 2.35 lakh tonne of sponge iron and 2.50 lakh tonne of billets annually. It has a current captive power production capacity of 28 MW. Post expansion, the company's capacity for manufacturing sponge iron will rise to 4.95 lakh tonne and billets will rise to four lakh tonne.

The company's power production is expected to more than double to 53 MW after expansion, which is likely to be through by October 2006.

"We want to be an integrated steelmaker, right from iron ore extraction to the production of wire steel. The power required for manufacturing will also be met by our captive power plant. We will require Rs 190 crore for our expansion, of which Rs 125 crore will be raised through debt and the balance Rs 65 crore either through an IPO or fresh infusion of equity," said Bajrang Agrawal, managing director, Hira Group of Industries.

GPIL is currently a 100 per cent promoter owned company and part of Rs 550 crore Hira Group. GPIL achieved a topline of Rs 191 crore for the year ended March 2005 and a bottomline of Rs 25 crore.

The company has a debt of Rs 75 crore. GPIL currently holds a market share of 2 per cent in the long products category of steel in the country that include bars, rods and wire.

"After expansion, we will increase our market share to 5 per cent, which is four lakh tonne out of the total market of 80 lakh tonne in the country," said Agrawal. Long products are predominantly used in the infrastructure and construction industry.

About 80 per cent of the fuel requirement of the company's captive power unit is also met through the flu gases, which are evolved during the steel production, said agrawal.

Raipur, Chattisgarh-based Hira Group of Industries specialises in steel, ferro alloys as well as power generation and coal beneficiation. The group achieved a consolidated turnover of Rs 550 crore for the year ended March 2005.