Ispat Plans To Raise Rs 235-Crore Debt

The Ispat group plans to raise Rs 235 crore by way of private placement of debentures convertible into preference shares to part-finance its Rs 1,600 crore captive power plant for its steel-making complex at Dolvi in Mah-arashtra.

The debentures would be converted into preference shares at the end of eighteen months. The dedicated power plant would form a key element of the Dolvi steel making project.

The Rs 4,845-crore hot strip mill at Dolvi would make it the cheapest steel-maker in the country, with cash break-even at $250 per tonne, Pramod K Mittal, vice chairman of the Ispat group, told Business Standard.

Equity from Ispat Industries would be to the tune of Rs 125 crore, with other promoters chipping in with another Rs 120 crore. This would take the total equity to Rs 480 crore.

Local financial institutions would contribute with Rs 733 crore, and the bank funding would be around Rs 387 crore. The contributions would put the total debt component of Rs 1,120 crore.

The captive power plant would have capacity of 354 mw (2x177 mw) and would depend on naphtha and furnace oil. Allocations for both materials have been received and the fuel agreement has also been signed. ABB of Germany is the EPC contractor for the project, while ABB of Switzerland is the O&M contractor. The technology would be that of combined cycle with supplementary firing of BF gases and furnace oil.

The Dolvi power project apart, the other major foray into power from the group is taking place in Vemagiri in Andhra Pradesh, where Ispat Power, another group company, has sealed a joint venture with ABB. This would be a 468 mw naphtha-based power plant with a total investment of Rs 1,600 crore. ABB would pick up 26 per cent of the equity in the project, while the Ispat group and its overseas associates would together hold 54 per cent of the equity.

Other investors would hold another 20 per cent, according to the plan.