Surana Ind to invest Rs 4,500 cr

BSE-listed Surana Industries Limited (SIL) is planning to invest over Rs 4,500 crore in expanding its steel manufacturing capacity and in power projects. To support the investment, the company is planning to raise around $120 million from private equity (PE) companies, including Sycamore Ventures LLC (Sycamore), New York.

Mauritius-based investor IndiaStar (Mauritius) Limited, a PE fund managed by Sycamore Ventures, currently holds around 24 per cent of the capital of SIL, post the conversion of the foreign currency convertible bonds (FCCBs) worth $25 million issued to it in 2007.

“The company has, among others, engaged Sycamore to tie-up the funding of $60 million for the steel expansion project,” said a source.

 

SIL has embarked on an expansion programme for addition of 1.4 million tonne of steel production a year at its existing facilities at Raichur in Karnataka and Gummindpondi in Tamil Nadu. The present aggregate steel manufacturing capacity of the company is 0.4 million tonne a year in these facilities.

The company has already been allocated 99.4 acre at Raichur for the proposed expansion and the total production at the project site is expected to go on stream by March 2014.

Of the total Rs 1,253-crore investment, the promoters and private equity investors would infuse Rs 401 crore, while the company will pump in Rs 100 crore from internal accruals and Rs 752 crore by way of debt, according to a senior official of the company.

The company’s subsidiary Surana Power Limited (SPL) is also planning to raise $60 million through the private equity route to support its Rs 2,400-crore, 2x210-Mw thermal power plant at Raichur. SIL has already infused a capital contribution of Rs 375 crore and the foreign PE investors and their associates and others are expected to bring in their share of Rs 300 crore in due course, the company official said.

The company has achieved financial closure, and as on March 31, 2012, it has spent around Rs 1,030 crore in the project. This has been met out of the equity contribution of Rs 300 crore and a term loan of Rs 770.84 crore. The project implementation is on schedule and is expected to go on stream by April 2013.

SIL’s step down subsidiary, PT Borneo Mines and Minerals, has acquired mining rights in the Sassanga coal mines in Indonesia. This will ensure regular supply of coal to both SPL as well as SIL. The price of coal will be very competitive and this will ensure greater viability for the company.

Surana Green Power, the renewable energy company of SIL, is planning to set up wind mills, which can generate 101 Mw of power. Meanwhile, the company has ruled out any possibility of entering the solar energy space.

The company has clocked revenues of Rs 1,351.42 crore during the year ended March 31, 2012, as compared to Rs 1,223.02 core a year ago. Its net profit stood at Rs 32.76 crore, as against Rs 56.55 crore.

Gennext to power SIL
Meanwhile, SIL has inducted two more members from the founders family into the board. Thirty eight-year-old Rajesh Surana, son of chairman GR Surana, and 32-year-old Rajiv Surana, son of GR Surana’s brother Shantilal Surana, were inducted as executive directors of the company effective March 2012.