Nagarjuna Steel Project To Be Set Up In Modules

The Rs 1,800-crore Nagarjuna Group has chalked out an alternate route to implement its Rs 3,500-crore steel project scheduled to come up in Mangalore.

The group, instead of directly setting up the integrated steel plant will be putting up the same in modules, ultimately leading up to a stage where the plant can produce hot-rolled steel coils. The company is also scouting for a foreign partner which can bring in substantial equity and expertise.

"We had to take this route as directly implementing the complete integrated steel would have been a strain on our finances," a senior Nagarjuna Group official said. Most financial institutions have reportedly refused to fund green-field integrated steel projects following a study which indicated a serious mismatch between supply and demand position in the market. "By taking this alternate route of implementing the project in modules, we can channelise the revenue flow into the project in tranches," the official pointed out.

 

"Financing individual modules of this steel project will not be a problem as we can always source the funds from our associate company, Nagarjuna Finance," he noted.

The company has received the required approvals from the state government to set up the projectwhich will initially have a capacity to produce 1.7 million tonne of integrated steel.

"We tried to implement this project as the Jindals too have put up their integrated steel plant in Karnataka. Our project has the expertise for backward integration into iron," the official added.

"We have taken up projects in core infrastructure sectors, such as steel, power and fertiliser, and we intend to find ways to implement and expand the projects," the official noted.

The group already has a presence in the steel sector through the Rs 209-crore Nagarjuna Steel which manufactures cold-rolled steel strips sold to automobile, two-wheeler and white goods industries. This company has now been merged with Pennar Steel of Hyderabad because of its poor showing which took a toll on its bottomline.