The Hindu Business Line : Electrosteel Casting gains on investment plans

Electrosteel Castings has been inching up after it announced fresh investments in Electrosteel Integrated Ltd, an associate company, to partly fund latter’s expansion plans.

Mr Umang Kejriwal, Managing Director of Electrosteel, told Business Line that Electrosteel Integrated is currently 40 per cent owned by Electrosteel Castings.

The additional investment in Electrosteel Integrated by Electrosteel Castings would be Rs 105 crore.

But the total project cost for scaling up of capacity (from 1.3 mtpa to 2.2 mtpa) by Electrosteel Integrated would be around Rs 7,250 crore, implying that that the project would heavily depend on borrowings.

Mr Kejriwal indicated that between two-thirds and three-fourths of the financing needs might be met by borrowings and the balance could be through equity. He said negotiations with a consortium of banks and institutions — which had already taken care of borrowing needs of the projects’ earlier version (Rs 5,000 crore) — was expected to be complete in the next three months. The project, to be set up on 500 acres of land near Bokaro in Jharkhand, would produce wire rods, reinforcement bars in straight lengths and DI pipes.

Electrosteel has obtained a coal mine and an iron ore mine to feed the project, for which the civil work is yet to commence. By end of 2009, 1.3 mtpa capacity is expected to be in place and by 2010, 2.2 mtpa capacity is scheduled to be installed.

The Re 1 stock ended the day at Rs 33.20, up 0.60 per cent. In the past one week alone the stock has gained 7 per cent.

Jayanta Mallick

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