Companies

Shyam Steel Industries to invest ₹600 cr to raise production capacity

Shobha Roy Kolkata | Updated on April 16, 2021

Lalit Beriwala, Director

To be funded through internal accruals and debt

Kolkata-based integrated TMT bar manufacturer Shyam Steel Industries Ltd is looking to ramp up production capacity through brownfield expansion at an estimated investment of ₹600 crore.

The company, which has capacity to produce close to six lakh tonne of TMT bars annually, plans to increase it to nine lakh tonne over the next 18-24 months.

According to Lalit Beriwala, Director, Shyam Steel Industries, the investment of ₹600 crore would be utilised for both backward and forward integration. While ₹400 crore would be invested for backward integration for ramping up sponge iron production and captive power, the remaining ₹200 crore would go towards increasing TMT production. Part of it would be funded through internal accruals and part of it through debt.

“Demand for TMT bars is on the rise with the government’s thrust on infrastructure projects so we are looking to enhance our production capacity from the current six lakh tonne per annum to nine lakh tonne over the next two years. This will be a brownfield project as we have land available at our existing project in West Bengal,” Beriwala told BusinessLine.

The company is also looking to add another six lakh tonne capacity through inorganic route by bidding for assets under IBC through NCLT. The assets for which the company has placed bids are primarily in Odisha and Jharkhand.

Inorganic route

“We are looking to put up a plant in Odisha and Jharkhand; this would be mainly through inorganic route through NCLT. We have bid for some assets and are hopeful of closing a deal in the next three-to-six months,” he said.

The acquisition of asset would help the company expand its manufacturing facility in these states.

The demand for TMT bars, which was hit during the first two months of lockdown last year, started picking up post June and witnessed a steady revival in October-November 2020 following a pick-up in demand driven by infrastructure sector.

The company, which had a turnover of ₹3,000 crore in 2019-20, managed to maintain its topline growth at similar levels in FY-21. Shyam Steel is expecting 15-20 per cent growth in sales in FY22 on the back of steady demand from infrastructure sector.

Demand for TMT bars

“The demand for TMT bars has not been much impacted so far due to the restrictions imposed in some states following the second wave of Covid. However, if there is complete lockdown imposed nationwide or if restrictions are enhanced then it might affect the demand,” he said.

Shyam Steel, which has a strong dealer distribution network in eastern India, recently launched its retail business in the South in Telangana and Andhra Pradesh. The company is looking to strengthen its retail distribution in northern and southern parts of the country.

It plans to double its dealer distribution network to 5,000, up from 2,500 at present in the next two years.

Published on April 16, 2021

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