Sangam group to foray into steel biz through new subsidiary

Bhilwara-based Sangam Group today announced its foray into steel business through a new subsidiary Mahalaxmi TMT Private Limited and will set up an integrated steel plant near Wardha in Maharashtra.

The plant, to be constructed in two phases, will involve a capital expenditure of Rs 697.50 crore, Sangam Group said in a statement.

"With Mahalaxmi TMT, we aim to usher in new technology to India for making sponge iron from iron ore fines that will reduce cost substantially. The rapidly growing steel market makes it a strong case for our Group to foray into the sector," Sangam Group Chairman R P Soni said.

The company will set up manufacturing capacity of 2.40 lakh tonnes per annum for mild steel billets in first phase which will be completed by May 2011.

Later the company plans to ramp it up to 3.36 lakh tonnes by May 2012 (second phase), the statement.

It would also set up 5 lakh tonnes per annum capacity for manufacturing TMT bars, angles and channels capacity along with 40 MW captive power plant in the second phase.

Entire project would be funded by an equity contribution of Rs 217.50 crore from the promoters, who hold 77.5 per cent stake in the new subsidiary, the statement said.

On the other hand, the remaining Rs 480 crore will be managed through debt, for which the company has secured loans from a consortium of 8 banks, led by Union Bank of India, the statement added.

Having an annual revenues of over Rs 1,500 crore, the Sangam Group has presence in textiles, infrastructure, real estate, power, education and steel.

It's flagship company - Sangam (India) Limited is one of the largest single location manufacturer of polyester-viscose dyed yarn manufacturer in the country.

Scrips of Sangam (India) Limited were being traded today at Rs 39.20 on the Bombay Stock Exchange at 1510 hours, up 0.77 per cent from the previous close.