The Hindu Business Line : Siscol plans Rs 400-cr capacity expansion

SOUTHERN Iron and Steel Company Ltd (Siscol), which has its plant at Pottaneri in Salem district of Tamil Nadu, has lined up an investment of about Rs 400 crore to modify the plant's existing facilities and to augment capacity.

The company has planned to come out with a rights issue to part-finance its investment plans and has filed the draft Letter of Offer with the Securities and Exchange Board of India.

In its letter, Siscol has said that Mecon Ltd, which conducted a techno-economic feasibility study to make the project viable, had assessed a capital expenditure of Rs 400 crore for capacity expansion from 0.3 mtpa to 0.6 mtpa in two phases.

The company said while the rights issue would garner Rs 173.74 crore, term loan would bring in Rs 230 crore.

The rights issue will consist of issue of 17,37,41,655 equity shares of Rs 10 each for cash at par on rights basis to the existing equity shareholders in the ratio of 23 shares for every ten shares held on the record date to be notified aggregating Rs 173.74 crore.

While the cost of the first phase to be completed by July 2005 will be Rs 45 crore, the balance Rs 355 crore would be spent in the second phase scheduled for completion by June 2006.

Siscol was originally promoted by the Coimbatore-based Lakshmi Machine Works Ltd and Tamilnadu Industrial Development Corporation Ltd. It is involved in the manufacture of pig iron, billets, bars and rods. LMW recently exited from the company by selling its entire shareholding to the Jindal group, which has a prominent presence in the steel industry.

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