The Hindu Business Line : RKKR group doubles Krishnapatnam project size

Chennai, Jan. 9 The Chennai-based RKKR group, which is putting up a 5-lakh-tonne integrated, alloy-steel plant at Krishnapatnam, Andhra Pradesh, is close to securing private equity funding. The project is being implemented by a newly-formed company of the group, SBQ Steels Ltd.

Earlier, it was conceived as a 2.5-lakh-tonne project to be put up at an investment of Rs 500 crore. But now with “tremendous response from user-industries” in the Chennai-Sriperumbudur belt, especially from the anchor customer, Caparo Industries, the capacity of the plant has been doubled.

Caparo, it is understood, will buy a third of SBQ’s production. The project will now cost Rs 1,100 crore for implementation, according to Mr Rajiv Rai, Chairman of the group.

Mr Rai told Business Line that many private equity funds were keen on participating in the equity of SBQ Steels. “We are in talks with 2-3 large players from New York,” Mr Rai said.

Project details

Phase-IA of the project, consisting of one blast furnace and a sinter plant, will produce 2.5-lakh tonnes of foundry grade (high-value) pig iron, market for which exists close-by. This unit will consume investments of Rs 300 crore and will be production-ready by September, Mr Rai said.

Phase-IB, to be put up at a cost of Rs 400 crore and completed by March 2009, will produce half a million tonnes of steel, essentially meant for the auto industry.

Technical tie up

“SBQ is looking for a technical partnership with a Japanese or European speciality steel manufacturer, so that the products manufactured are to international specifications,” Mr Rai said. Certification by auto majors is a necessity for a steel maker and hence the technical tie-up, he added.

Merchant power plant

Meanwhile, the RKKR group has also evinced interest in putting up a 1,200-MW merchant power plant in Nellore district, based on imported coal.

It has also approached the Jharkhand Government to set up a 2-million-tonne integrated steel plant in the State.

Mr Rai said he had met the State Chief Minister, Mr Madhu Kora, who has offered all assistance. The group also wants to acquire iron ore mines in Karnataka or form a joint venture with a company that has mining rights.

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