Monday, November 29, 1999

Promoters to infuse Rs 230 cr into debt-ridden Ispat

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Pramod and Vinod Mittal-controlled Ispat Industries Ltd has decided to infuse Rs 230 crore to subscribe 5% of equity capital, in order to part-finance three projects, which would help in reducing operational cost.Executive director Anil Sureka on Saturday said the promoters would subscribe at a price "not less than Rs 20.58 a share," which would aggregate to a total infusion of Rs 230 crore. He was speaking on the sidelines of Ispat's extraordinary general meeting.The company took its shareholders' approval on Saturday to place up to Rs 500 crore through QIP (qualified institutional placement) along with preferential allotment to promoters.Sureka said the company has planned three projects--- a 1 million tonne per annum coke oven plant, a 110mw plant and an iron ore mining project in Maharashtra. These together would entail an investment of Rs 1,710 crore.Ispat would not raise any fresh debts to fund the coke oven and power projects, although the mining project would need some debt funding, Sureka said."Since the power and coke oven plants were being executed through separate companies, we will not add any fresh debt except for executing our mining project," Sureka said.He said the company as of now has a debt burden of Rs 6,700 crore after repaying Rs 1,000 crore in 2009-2010. Ispat aims at repaying Rs 700-750 crore per annum to reduce its overall debt burden.Surekha said for the 1 mtpa coke over plant, which would require an investment of Rs 1100 crore, Ispat would invest only Rs 100 crore to take up 26% in the project, while the balance stake would be held by a foreign partner. Sureka expects the coke oven plant to be operational by March 2012.Ispat Industries' subsidiary Ispat Power will execute the 110mw project at an estimated cost of Rs 490 crore.Ispat Industries will spend Rs 120 crore for developing the mining project in Maharashtra.Sureka said with all the three projects commissioned, Ispat would secure cent percent captive coke, 40% of its total power requirement and 50% of its iron ore requirement, which it currently sources from the market at market-determined prices."Once power, coke oven and iron-ore mining projects are complete, the EBITA margin will increase to 30%," Sureka said.Ispat on Saturday reported a net profit of Rs 22 crore on a net income of Rs 2349 crore for the quarter to March 31 2010, against a loss of Rs 38 crore on a net income of Rs 877.5 crore during the corresponding period last fiscal. The company's financial year has been extended by three months to June 30, 2010, Sureka said.

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