Shri Bajrang Power & Ispat to nearly halve debt from Rs 700-cr IPO

Raipur-based integrated steel manufacturer Shri Bajrang Power & Ispat plans to pay back around Rs 400 crore of its long-term debt from the proceeds of its forthcoming Rs 700-crore initial share sale.

The company, among the top 10 in terms of installed capacity for iron ore pellets, iron ore beneficiation and sponge iron, has a little over Rs 840 crore of debt, of which nearly half is long-term debt which it plans to repay with the IPO money.

After the repayment, the fully family-owned company will be left with around Rs 500 crore of debt, Anand Goel, one of the promoters and the executive director of the company, told PTI.

The company is undertaking a Rs 217-crore brownfield expansion which will expand its capacity for sponge iron, steel melting, rolling mill, ferro alloys and captive power.

The project is expected to be completed by early January next, said Sandeep Goel, one of the promoters and the chief financial officer, adding the entire capital expenditure was through internal accruals.

The company closed FY21 with a topline of over Rs 3,000 crore, boosted by a massive spike in both demand as well as prices, which also widened its operating margin to over 21 per cent, helping it earn a net income of Rs 630 crore.

Having made a topline of Rs 2,300 crore and net income of Rs 414 crore in the first half of the current fiscal, it expects to close the full year with a revenue of Rs 4,500-5,000 crore and earn a net income of 800 crore, Anand Goel said, adding the firm has not reported losses since FY05.

In fiscals 2021, 2020 and 2019, its revenue stood at Rs 3,031.21 crore, Rs 2,663.71 crore and Rs 2,685.23 crore and net profit at Rs 312 crore, Rs 149 crore and Rs 232 crore, respectively, Srinivas Manoharan, the company president, said.

Of the total revenue, exports contributed Rs 327.28 crore, Rs 145.42 crore and Rs 12.21 crore respectively in fiscals 2021, 2020 and 2019.

The price spiral has seen the company, which operates three plants in Raipur, booking an operating margin of 30 per cent so far this fiscal, up from 19 per cent in the previous financial year.

Anand Goel said the entire Rs 700 crore issue is a primary share sale and the promoters will dilute the Sebi mandated 25 per cent of their holdings through the IPO.

The company manufactures intermediate and long steel products such as TMT bars, ERW pipes, wire rods, HB wires including binding wires, ferro alloys, steel billets, iron pellets and sponge iron. It sells under the labels of Goel TMT, Goel Pipes and Goel Wires.

As of May 2021, its annual capacity stood at 1.76 million metric tonnes (MT) comprising intermediate and final products. Its installed iron ore beneficiation and palletisation capacity was 2 MT and 1.4 MT annually, respectively.

The company does not buy power from outside as its captive power generation of 83 MW is enough for its demand. Of the total generation, 50 MW come from waste heat recovery that helps it minimise emissions.

It has mining rights with an iron ore mine located in Uttar Bastar Kanker in Chhattisgarh wherein it is permitted to mine 1.2 MT annually. That apart, it has an open-cast manganese ore mine in Vizianagaram in Andhra Pradesh.