Calcutta, Jan. 16: The city-based Balaji group, which is setting up an integrated steel plant in Durgapur, is planning to tap capital market to garner funds in order to part finance the project.
The size of the public issue is in the region of Rs 70-80 crore while the Durgapur project will have an investment of Rs 200 crore. This is the second largest private investment in the state’s steel industry.
Confirming the move, group director Aditya Jajodia said the Durgapur project is already being implemented. The fund, to be mobilised through the public issue, will be used mostly to part finance the second phase of the project.
The project is being implemented in two phases. While the first phase is expected to be completed by May this year, work on the second phase will start in October.
Jajodia has further pointed out that the group, which has four companies — Jai Salasar Balaji Industries, Jai Balaji Sponge Ltd in Ranigunj, Jai Balaji Sponge Ltd in Durgapur and Chandi Steel Industries, is currently undergoing a major corporate restructuring as a precursor to the public issue.
“All the four group companies will be amalgamated with Shree Ramrupai Balaji Steels Ltd (SRBSL), which is setting up the plant in Durgapur. The amalgamation process is already on. We will finalise the details for the public issue as and when the bankers’ approval comes,” Jajodia said.
The Jajodias and associates, who have 100 per cent holding in SRBSL, will shed around 60 per cent stake through the public issue. The company’s capital base stands at Rs 85 crore.
The Durgapur plant, which has been awarded mega project status by the state government, will have a four-lakh tonne pig iron manufacturing facility, a 1.25-lakh tonne wire rod mill, downstream facilities for converting three lakh tonne hot metal into billet and a 10-MW power plant.
The project, however, will need around 55 MW power, much of which will be supplied by DVC and Durgapur Projects Ltd, Jajodia said.
The plant is going to provide direct employment to over 250 people, while around 3000 people will be indirectly employed.
The Balaji group is also exploring possibilities to develop captive iron ore mine in Orissa in order to streamline the sourcing of raw materials.
The state government has already given 66 acres of land in the industrial area of Durgapur.
The group has charted out plans to invest around Rs 70 crore to set up a 12-MW power plant in the Raniganj-based Jai Balaji Sponge plant. Jajodia said the captive power plant at the Raniganj unit will help the group reduce cost of production by more than 15 per cent, increasing the overall profitability.
The group, which currently has a turnover of Rs 200 crore, has set a target of doubling the sales in another three years time.