Brahmani to source machinery from China for Kadapa plant

Brahmani Industries Limited, a public limited company under incorporation, has short-listed three Chinese companies "� Sino Steels, MCC and Showgang "� for the supply of equipment and erection for its proposed integrated steel plant at Kadapa.

The plant will have an initial capacity of 2 million tonne and is planned to be set up within 24 months of the signing of the memorandum of understanding with the Andhra Pradesh government on May 21.

The company has also roped in PR Tripathi, former chairman and managing director of NMDC, as its non-executive chairman, and SR Jain, former head of Steel Authority of India, as its board member. It is in the process of bringing in top technocrats from established steel majors such as Essar, Jindal, Bhilai and RINL.

Brahmani proposes to increase the capacity of its Kadapa plant to 4.3 million tonne in 36 months and to 10 million tonne by the year 2017. The move would see the company become the second largest steel producer after Vizag Steel, which potentially makes Andhra the largest steel producer in the south even after taking into consideration the present expansion plans of Jindal Vizianagaram Steel in Karnataka.

G Janardhana Reddy, chairman of Obulapuram Mining Company Private Limited, Bellary, and a key promoter of the project, said the initial rounds of discussions with the three Chinese companies were over and one of them would be finalised soon for EPC (engineering, procurement, construction) under turnkey basis.

"We have opted for Chinese machinery because it is the most efficient technology suitable for the 2-million capacity level," he told Business Standard.

Reddy said the technology and design of the project were also aimed at optimising the efficiency in the usage of water. According to him, 2 tmc of water would be sufficient to meet the requirement of 4.3-million tonne capacity plant as compared with 1.5 tmc of water consumed for 1 million capacity in an existing plant in Karnataka.

Of the total capital investment of about Rs 4,430 crore with 2:1 debt equity ratio proposed for the initial phase, the company would invest Rs 1,500 crore from its own resources towards equity component. Subsequently, it will enter into tie-ups with financial institutions for funding requirements.

Obulapuram Mining Company, the holding company of Brahmani Industries with 55 per cent equity in it, is slated to increase its revenues to Rs 1,000 crore during the current financial year from Rs 500 crore last year. The group's consolidated turnover, whose revenues streams also include hotel and real estate businesses, for the same period is expected to touch Rs 1,250 crore, Reddy said.

The company has mines with estimated reserves of 102 million tonne of iron ore in Anantapur district. It currently produces over 5.5 million tonne of iron ore annually of which 1.5 million tonne is being exported to China and the rest is being supplied to Jindal Steel and other players in Karnataka.

"Besides the existing mining lease for 6 million tonne production a year, our company has applied for fresh leases for iron ore in several locations in Karnataka. Of this, 2 mining leases for an estimated 16 million tonne production per annum capacity is under advanced stage of issuance of final grant," Reddy said, adding that the total iron ore production under their command would far exceed the requirement of the 10-million tonne final capacity of the greenfield Kadapa steel project.

The project is designed to predominantly use iron ore fines from the Anantapur mines since it contains 85 per cent of fines with 68 per cent Fe content. The project also includes a 200-mega watt power plant of which 180-Mw is proposed for captive use.