The Hindu Business Line : SBI Caps made lead arranger for MCF coke unit financing

MANGALORE Chemicals & Fertilizers Ltd (MCF) has appointed SBI Capital Markets as its lead arranger to structure the financing of its proposed Rs 360-crore metallurgical coke manufacturing facility.

"We are looking into the various aspects of financing this venture," the company's Vice-President (Finance), Mr A. Rudrachary, said.

MCF is yet to decide on the mix of foreign and local debt. The debt-equity ratio for the project could be 2:1, but "it is too premature to decide", Mr Rudrachary said.

MCF is also open to the idea of roping in third party equity participant for the project, who has to pick up the equity in a special purpose vehicle to be floated for the project execution, he added. "We are just working out the options," Mr Rudrachary said.

The new facility with an annual capacity of 4,50,000 MT is likely to go on steam within 18 months of start-up. The target time frame for commissioning the plant is October 2005.

The facility will also house 28-30 MW power and steam co-generation, which in turn will be used by the fertilizer plant. The material handling and storage facilities are being set up now to handle the eventual doubling of the metallurgical coke capacity in the second phase of the project, which is expected to start immediately following commissioning of the first phase.

The diversification is aimed at reducing dependence on fertilizer policies of the Government, boost profitability and arrange for an alternative source of power to replace the ageing captive power plant.

Moreover, the coke prices have firmed up globally and the company believes the prices to stay hard for another four-five years, which would help it to generate favourable revenue growth. MCF, which has to import coal to manufacture coke, will get 180 days credit in the international market.

MCF, which is a debt-free company, currently has a cap of Rs 40 crore as working capital requirement from the UTI Bank.

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