PSL to dilute equity to fund two-year capex

Steel pipes maker PSL Ltd is planning to dilute a part of its equity to raise funds for capital expenditure for the next two years.

The company is looking at increasing its capacity to over a million tonne per annum from the existing 6.7 lakh tonne in the next couple of years.

PSL has also planned two greenfield projects in Rajasthan and Andhra Pradesh in the next financial year. Ashok Punj, managing director, said,"We are looking at the equity route to part-finance our expansion in the next two years. However, we have yet not finalised whether it will be fresh issue or only a dilution." The funds raised will also be utilised for prepayments of high cost debt, Punj said.

"We are looking at reaching the one million tonne per annum mark in the next two years. We have planned to increase our capacity by about 1.5 lakh tonne in the year 2004-05 and by another 2 lakh tonne in the next year."

The two greenfield pipe mills will entail an investment of around Rs 30 crore, Punj said. PSL currently has six pipe mills and four other plants across the country. The company is looking at diluting part of its promoters holding of around 70 per cent on a private placement basis or through book building, Punj said.

Meanwhile the company is expecting a 100 per cent jump in its turnover for the current fiscal. "We should be crossing Rs 800 crore in the current year as the market has grown tremendously during the year," Punj said. PSL registered net sales of Rs 391 crore in the year ended March 31 2003.

The company recorded net sales of Rs 275.5 crore in the quarter ended December 31, 2003, compared with net sales of Rs 92.98 crore in the corresponding period of the previous year.