Saravana Global charts Rs 200cr expansion

To set up new manufacturing unit in Chengalpet district.

Saravana Global Energy Ltd (SGEL), manufacturers of high-voltage insulators, is embarking on a major expansion programme under which the company is setting up a new manufacturing unit for high-voltage hollow insulators in Chengalpet district of Tamil Nadu on an investment of Rs 200 crore.

SGEL's expansion comes on the back of growing demand for high-voltage hollow insulators driven by huge investments being made in the power sector.

SGEL sees a surge in demand for high-voltage hollow insulators, which find applications in power transformers, switchgears and power equipment among others, both in the domestic and international markets.

The size of the market for hollow insulators is estimated at between Rs 700 crore and Rs 800 crore. Only five companies in the organised segment are engaged in the business, Ajeeth P Challani, managing director, SGEL, said.

He said SGEL had acquired about 150 acres in Chengalpet district for the proposed plant as well as future expansion programmes that include a foray into the power equipment business.

"Our aim is to grow in the power sector by way of forward and backward integration," Challani said.

SGEL has secured Rs 100 crore in funding from NYLIM Jacob Ballas India Fund III by offering a minority stake.

The company will use the proceeds to fund the establishment of the new plant, while the remaining portion of the project cost will be funded through a combination of internal accruals and debt.

The new manufacturing unit, SGEL's second plant, will have a capacity to produce 24,000 tonnes per annum. However, the company plans to develop the plant in phases.

The new plant will manufacture hollow insulators in the range of 130 kv and above.

The first phase will have a capacity of 6,000 tonnes per annum and will be ready by this year end.

"We have already acquired the land and construction will start soon," he added.

Chennai-headquartered SGEL has been supplying to Areva, Siemens, ABB, BHEL and Crompton Greaves, its large domestic customer, among others. It posted revenues of Rs 65 crore in 2006-07 and expects to end the current fiscal with revenues of Rs 125 crore.

The company also expects the new plant to boost direct exports of products and envisages share of direct exports to go up to 30 per cent over the next two years from the present five per cent.

SGEL was promoted by Padam J Challani, chairman and D B Prakash Chand Jain, vice-chairman, in 2003, when they had acquired the assets of erstwhile Seshasayee Industries Ltd, a manufacturer of porcelain insulators which became sick in 1992.

The unit was revived from an initial capacity of 1,200 tonnes per annum under the leadership of V Pichumani, adviser to the company, according to a company statement.