Financial institutions led by the Industrial Development Bank of India (IDBI) have sanctioned a Rs 105-crore term loan to part-finance Lloyds Metals' Rs 150-crore expansion programme at its sponge iron unit in Ghugus, Maharashtra.
While IDBI has sanctioned Rs 50 crore, the contribution of Industrial Finance Corporation of India is Rs 15 crore.
ICICI will pour in Rs 25 crore. Other institutions will chip in with Rs 15 crore to help Lloyds to double its sponge iron capacity from 1.5 lakh tonnes.
Fifty per cent of the loan will be disbursed in foreign currency. The rest of the fund requirements for the project, i.e., Rs 45 crore, is to be internally generated, a company official said.
Part of the funds has already been disbursed and Lloyds has started work on the project.
The expanded capacity is expected to be commissioned by the end of next year, company sources said.
The first phase of the coal-based sponge iron plant went on stream in September 1995, and it currently meets the raw material requirements of Lloyds Steel located at Wardha. The Rs 2,000-crore Lloyds group has received permission from the finance ministry to raise Rs 245 crore as foreign debt.
This amount will be used for the group's 80 mw captive power plant to be set up at Wardha at a cost of Rs 394 crore. The coal-based power plant is expected to result in a gross saving of Rs 140-crore per annum for the company.
Lloyds Steel is expected to save Rs 22 crore as a result of the recent decision by the Maharashtra government to reduce night power tariff to 80 paise per unit and the 15 paise duty removal for the Vidarbha region. The company's power bill is currently Rs 150 crore, the source added. The Lloyds group has also decided to either sell off or close its pharmaceutical company, Lloyds Laboratories. Keeping in view the difficult domestic industrial scenario, the group has decided to concentrate on its core areas of steel, engineering and finance.
The group has a capacity of six lakh tonne per annum of hot rolled coils, cold rolled coils as well as galvanised plates and coils.
