The Hindu Business Line : RKKR Steels may offload stake in arm

Greenfield plant: (From left) Mr Ritesh Rai, Managing Director, RKKR Steels Ltd; Mr Rajiv Rai, Chairman of RKKR Group; and Mr R.S. Chavan, CEO and Managing Director, H & K Rolling Mill Engineers Pvt Ltd; at a press conference in Chennai on Wednesday.

Our Bureau

Chennai, April 16 RKKR Steels Ltd may sell 15 per cent stake in its wholly owned subsidiary, SBQ Steels, to a private equity fund. Discussions have been on for some time; RKKR’s Managing Director, Mr Rajiv Rai, said today that a decision is likely in a couple of months.

“We may dilute up to 15 per cent of our stake in SBQ Steels if we decide to go ahead,” he said. SBQ is putting up a Rs 2,000-crore project for producing specialty steels, cement and power.

The company is setting up a greenfield fully integrated steel plant near Nellore in Andhra Pradesh through a special purpose vehicle – SBQ Steels Ltd. The project, which also includes a 300,000-tonne cement plant and 65 MW thermal power plant for captive purpose, is coming up on a 500-acre piece of land.

The first phase, which will be completed by October this year, will have capacity to manufacture 2.5 lakh tonne steel and it will be doubled in the second phase. The entire project cost is pegged at Rs 2,000 crore and will be funded through debt and equity in the ratio of 65:35.

“While the money raised through PE would be to part fund the II phase of the project, for the debt part of it, the company is in talks with seven banks,” Mr Rai said. According to him, three banks have given in-principle nod and the other four are expected to send in their clearance soon.

“The PE exercise is a prelude to the proposed IPO later,” said Mr Ritesh Rai, Managing Director.

RKKR Steels today announced the launch of its Thermex steel bars which the company makes with technical collaboration from HSE Germany. Thermex is one of the two patented technologies to manufacture thermo processed bars worldwide. The company has its rolling mills at Tiruvottiyur in Chennai, where it has set up the patented quenching system. The capacity has been doubled to one-lakh tonnes a year “to meet the growing demand from the construction industry”.

The company hopes to achieve a turnover of Rs 400 crore in the current fiscal.

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