Ispat Industries has reported a cost overrun of a further Rs 700 crore in its 3-million-tonne hot-rolled coils project at Dolvi in Raigarh district of Maharashtra. The project cost now stands at Rs 7,206 crore, the company said in its annual report for 2000-01 to shareholders.
The promoters propose to infuse Rs 312 crore as additional capital. The original project cost, estimated two years back, of Ispat's phase-II, which will take its capacity from 1.5-million-tonne (MT) to 3 MT, was around Rs 4,590 crores. But this later escalated to Rs 6,500 crore at the end of last fiscal and eventually to Rs 7,206 crore.
Thus, phase-II has been delayed by more than two years now. The company had earlier given a written commitment to the financial institutions (FIs) on commissioning the phase-II by March, 2001.
"In terms of the restructuring proposal, the company is required to raise Rs 312 crore to part-finance the project by way of subscription to equity shares (Rs 245 crore) and preference shares (Rs 67 crore) from promoters and others," the company said in its annual report.
Accordingly, the company will issue and allot equity and preference shares of Rs 10 each aggregating to Rs 312 crore and the allotment is expected to be completed by December 27, 2001, the company said.
Phase-I of the coil project with a capacity of 1.5 million tonne had commenced commercial production in April 2000. According to Ispat Industries, the implementation of the phase II was delayed "due to several constraints including the non-availability of requisite project funds."
The company, according to the analysts, is now focusing on cost-cutting and value-added products as a survival strategy.
3 new faces
INSET BOX:
Ispat Industries has inducted three new non-executive directors in its bid to professionalise the board. S S Kothari, A Besant C Raj and Bahram N Vakil have been appointed as additional directors of the company. The company had received notices from existing members proposing their candidature, and their appointment will be taken at the company's forthcoming annual general meeting.
