Welspun Power and Steel Ltd, a flagship company of the Welspun Group, is all set to invest more than Rs 4,000 crore in brownfield expansion of its recent acquisition of sponge iron business, Vikram Ispat, revealed. The company will raise Rs 4,000 crore through its tie-ups with banks along with promoter?s contribution through equity.
Welspun Power and Steel Ltd is a closely held company having its manufacturing unit at Anjar in Gujarat and had acquired Vikram Ispat for Rs 1,030 crore from Grasim, an Aditya Birla Group company, last month.
Welspun Power and Steel will now manufacture slabs that are required to make steel plates and coils by its other entity Welspun Gujarat Stahl Rohen Ltd (WGSRL), which is the second largest (large diameter) pipe producer in the world.
Talking to FE, Jindal said, ?Vikram Ispat already produces one third of what we require. Going forward, balance two-third is what we are planning and working out the final details.?
?We expect to achieve financial closure in 3 months’ time and expect the expansion to be fully operational by FY2011. We are targeting the first slab to be out by October 1, 2008. This expansion will make us self sufficient and will make us the largest integrated pipe manufacturer in the world,? he adds.
The company at present buys slabs from the international markets for its requirement.
On the other hand, WGSRL has also recently begun operations of plates out of its 1.5 million tones of plate-cum-coil mill, which is a backward integration project in Anjar, Gujarat to meet the internal requirement. Production of coils will begin soon, says Jindal.
Moreover, WGSRL is on its way of completion of $150 million facility in USA, which once completed will produce 3,00,000 net tones of tubular steel pipes for the use of oil & gas industry. The company hopes to begin production by end of 2008.
Catering mostly to the export markets, the company?s 60% business come from US and Canada.
Welspun Gujarat Stahl Rohen Ltd shares on Friday were up 2.28% to close at Rs 334.60 on the Bombay Stock Exchange.
