IFC to part-fund DCM Shriram expansion

DCM Shriram Consolidated Ltd (DSCL) has roped in International Finance Corporation (IFC) for part funding its $74.2 million capacity expansion project.

DSCL's core business include plastics & chemicals, and agro-business and the project envisaged includes expansion of DSCL's PVC resin and carbide capacities, replacement of the company's chlor-alkali plant with more environment-friendly membrane cell technology.

It also includes adding a 40 mw power plant and expanding its network of rural retail stores. The total project cost was estimated at about $74.2 million which includes incremental working capital and contingencies and IFC was likely to provide $30 million for the project for a period of three years.

According to IFC most of the project investment will be made at the company's existing integrated manufacturing complex at Kota in Rajasthan.

The project primarily involves expansion of the company's PVC and carbide production capacities, the replacement of the company's chlor-alkali production technology from mercury cells to the environment friendly and efficient membrane cells and supporting capital expenditure to increase captive power generation and expansion of the company's network of agro-product retail stores.

DSCL is headquartered in New Delhi and has annual revenues of about $315 million. The company's production facilities in India are located in Kota (Rajasthan), Bharuch (Gujarat), Ajbapur (Uttar Pradesh), and Rupapur (Uttar Pradesh).

"IFC's role would be to support DSCL, which is in a highly capital-intensive business, mobilise long-term capital in line with its business requirements and to promote the company's sustainable growth in its diverse lines of business," said IFC.

"The average maturity of the a loan proposed by IFC would be about three years higher than the average maturity of the company's existing loans. Therefore, the strengthening of the company's capital structure will be a direct long-term benefit from IFC's involvement. IFC's involvement is also expected to encourage domestic lenders to provide long-term funds for the Company's present and future projects," said the World Bank body.

DSCL and its subsidiaries are owned by three Shriram brothers - the sponsors are Ajay Shriram, Vikram Shriram and Ajit Shriram who have a 52.7 per cent holding in DSCL.

The balance shares are held by the general public "" 14.1 per cent, banks and financial institutions 22.6 per cent and other corporates hold 10.6 per cent.