The Telegraph
Since 1st March, 1999
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Bengal to cash in on steel sector boom

Calcutta, Oct. 16: The steel sector boom has come as a windfall for Bengal with investments worth over Rs 1,200 crore being lined up in the Durgapur-Ranigunj industrial belt.

According to Writers’ Building sources, steel is the largest sector attracting huge investments.

Leading the pack is the Balaji group, which has lined up investment plans of over Rs 600 crore in setting up a greenfield integrated steel plant and expanding its existing sponge iron manufacturing facility in Durgapur.

Jai Balaji Sponge Ltd (JBSL) is the first steel company in eight years to announce a Rs 10 crore public issue. The Balaji group has also decided to garner around Rs 100 crore for Shri Ramrupai Balaji Steels Ltd through private placement for its greenfield project.

Jindal Iron, Sobha Ispat, Ma Amba Steel Company and SPS Ltd have also lined up huge investment plans for setting up greenfield steel projects either in Bankura or in the Durgapur-Ranigunj industrial belt.

According to Balaji group managing director Aditya Jajodia, a spurt in demand for steel has paved the way for further investments in the sector, which otherwise remained stagnant for over five years.

“The government thrust in the construction sector and road projects has increased steel demand substantially. Moreover, an unprecedented demand in international markets has led to increased exports for domestic companies,” Jajodia said.

Jai Balaji Sponge, which is warming up for its maiden issue, is set to increase its production capacity by over 40 per cent from the existing 60,000 tonnes.

“The demand situation has forced us to expand capacity because we are not able to maintain stocks for even a week. I think we have to double the capacity in a short period of time to keep pace with the market demand,” he said.

The Balaji group also has plans to set up a 12 MW captive power plant where power will be generated from waste gas.

A 50 MW power plant using the same technology will come up in the integrated steel plant belonging to Shri Ramrupai Balaji Steels.

The blast furnace unit has already been commissioned in the greenfield project of Shri Ramrupai Balaji Steels.

Jajodia said the debt-equity ratio for the new plant will be around 2:1 with the promoters stake remaining at 50 per cent.

“The IPO announced for Jai Balaji Sponge is only to make the company listed in the National Stock Exchange. The fund to be garnered from the market will help finance only one-fifth of the expansion project of the company,” Jajodia said.

Shri Ramrupai Balaji Steels has already acquired 70 acres of land for the greenfield projects and the company has identified another 550 acres for acquisition.

The SPS group and the Ma Amba Steel Company are planning to invest Rs 600 crore and Rs 100 crore, respectively, for their greenfield projects in Durgapur and Mejia, sources said.

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