Kudremukh Iron Ore Company Ltd (KIOCL), a wholly state-owned enterprise mini-ratna under the steel ministry, will join hands with Bangalore-based United Telecom to set up an integrated steel plant in Karnataka at an investment of Rs 9,000 crore.
K Ranganath, CMD, KIOCL, said that company is in the process of forming a joint venture with URSIPL, a sister concern of United Telecom .
KIOCL would acquire 26% equity stake, while the remaining will be owned by URSIPL, he added.
For 26% stake in the joint venture, KIOCL should invest around Rs 2,250-Rs 2,600 crore, he said. The company will raise this investment through 1:2 equity debt ratio. The company may require to invest Rs 900 crore from the internal accruals, while the remaining would be raised as debt, he added.KIOCL?s cash reserve stood at Rs 1,200 crore.
Earlier, KIOCL had called for Expression of Interest from interested companies to jointly up an integrated steel plant in Karnataka. URSIPL has expressed its interest to KIOCL for the proposal. URSIPL has already approached the Karnataka government for the allotment of land and water in the northern part of the state to set up the steel plant. Recently, the KIOCL board approved a joint venture with URSIPL, the KIOCL chairman said.
The initial capacity of the integrated steel plant would be 1.5 million tonne per annum (MTPA) and it can be upgraded to 5 MTPA.
The chairman added that setting up of steel plant will help the company get captive iron ore mining lease as the state government has a policy of granting mining lease to the entrepreneurs.