Sujana Metal sketches Rs 840 cr growth plan

Written by Corporate Bureau | Hyderabad, May 30 | Updated: May 31 2008, 06:42am hrs
In a bid to transform itself into an integrated steel product company, the Rs 3,000 crore Sujana Metal Products Ltd (SMPL), part of the Sujana group, has charted a series of acquisitions and greenfield projects in the next one to two years.

Speaking to media, Sujana group chairman YS Chowdary said that the group is looking at organic and inorganic modes to achieve its expansion plans. We have plans for forward and backward integration, right from iron ore mining to ready to use steel products, Chowdary said.

The company is now targeting an investment of Rs 840 crore towards acquisitions, modernization and expansion. While the company proposes to raise term loans to the tune of Rs 470 crore, promoters will bring in Rs 170 crore towards warrants and the working capital needs will be covered through internal accruals, Chowdary said.

The group has already acquired two units - Kamini Steels and Handum Industries - and is in the process of acquiring three more - Saritha Steels, Glade Steels and Sree Ganga Steels - with an estimated investment of Rs 180 crore.

Further, the company is in the evaluation process of some more companies for acquisitions, he said.

When asked about the reasons for acquiring sick units, Chowdary said, it would be advantageous to produce steel products near to the markets saving transportation costs. Besides, the group has enough experience in turning around the sick units.

This apart, the group is also planning to establish two greefield units, one each for billets and sponge iron at Chennai and Hyderabad respectively. SMPL is planning to invest about Rs 370 crore for these projects, he said.

Besides, the company is also looking at iron ore mining, for which it has already made application. We hope to hear something in the next six months, Chowdary said.

On financials, the company is expected to achieve a turnover of Rs 1,400 crore for the fiscal ending June 2008, with an estimated profit of Rs 50 crore. Conservatively, SMPL is targeting to achieve a turnover of Rs 3,100 crore by the year 2010.