Pramod Mittal group-owned Ispat Industries Ltd has lined up capital expenditure plans worth Rs 2025 crore to increase capacities and reduce key input costs. The company is also venturing into real estate development by entering into a 50:50 joint venture with a realtor to construct commercial properties on its Mumbai property.
Ispat, which is in the process of expanding the capacity of its integrated steel plant at Dolvi to 5 million tonne a year, has decided to set up a one million tonne a year coke oven plant and a 4.5m tonne a year pellet plant in Vishakapatnam.
“The coke oven plant will partly cater to its coke requirement for blast furnace, while the pellet plant will contribute to pellet requirement at the Dolvi plant reducing input costs,” Pramod Mittal told shareholders at the 22nd annual general meeting of the company in Kolkata on Wednesday.
To secure iron ore supplies, the company has also bid for mines in Jharkhand. Ispat, for this purpose, has also signed an MoU with the Jharkhand government for local value-addition involving setting up a 2.8m tonne steel plant.
“To finance its planned projects, the company proposes to raise $500 million of foreign currency convertible bonds in the current year, for which the approval of the board has already been received,” Mittal told reporters after the meeting.
Even as Mittal hunts for fresh debt, the company is still burdened with a Rs 7500-crore debt burden. Out of this, Rs 3000 crore was taken in foreign currency.
The debt of the company carries an average interest charge of 10.4%. Mittal is planning to reduce its interest burden by around Rs 150 crore through a strategy of debt and currency swap, finance director Anil Sureka said.