Tiruchi-based power plant equipment manufacturer Cethar Vessels Ltd plans to come out with its initial public offering within a year, the company's Chairman, Mr K. Subburaj, told Business Line on Thursday.

The company, which ended 2010-11 with a turnover of Rs 2,437 crore, would use the Rs 2,000-odd crore it would raise from the public to invest in the proposed power generation plants of its newly-formed subsidiary, Cethar Energy Ltd.

Cethar Vessels — which raised Rs 370 crore from Barings Capital in December, with option to raise Rs 100 crore more — is using a part of the funds to buy lands for the proposed projects. Cethar Energy's intention is to put up two power stations of 4,000 MW each in two of the States of Tamil Nadu, Andhra Pradesh and Orissa.

For a better part of its 27-year existence, Cethar Vessels has produced and supplied boilers for industries that need the equipment for generating steam rather than electricity. Only recently — after Mr Subburaj bought out the stake of his co-promoters in 2005 — did the company break into boilers for electricity generation, and started planning to increase capacities.

Currently, the company is executing a 4x300 MW project for SKS Ispat and another 350 MW for Ind Bharat. Cethar Vessels has no experience in power generation but Mr Subburaj, for one, is not daunted by the enormity of the ultra-mega-sized projects proposed. He has not only mapped out the funding sequence for the projects, but has also conceived of a unique combination of conventional and circulating fluidised bed combustion boilers that are more expensive but can handle low-grade fuels too.

Confident

Projects of 8,000 MW will call for investments of the order of Rs 30,000 crore, but Mr Subburaj says proceeds from the public offer, complemented with his own resources and funds generated by a further dilution of stake in Cethar Vessels, will be enough to write out the cheque for the equity portion of the first 4,000 MW.

The confidence arises out of the order booking run-rate of Cethar Vessels, which has begun 2011-12 with on-hand orders worth Rs 8,000 crore. Mr Subburaj says the company's turnover in the current year would be Rs 4,600 crore, crossing the $1-billion mark. An example of the confidence is the Rs 110-crore, swanky corporate office of the Cethar group that is coming up on the outskirts of Tiruchi.

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