Have enabling resolution to fund capex plans: Zenith Birla

2339 Investors following Zenith Birla. Share this News with them.

0

Like this story, share it with millions of investors on M3

Have enabling resolution to fund capex plans: Zenith Birla

Zenith Birla is looking to up capacity of its spiral mills and ERW pipes. It plans to invest Rs 300 crore for its expansion plans for which it has received its board's enabling resolution. In an interview with CNBC-TV18, PVR Murthy, Group Director-Finance, Zenith Birla outlined company's capacity expansion and fund raising plans.

Post your opinion here

 

0

Tweet

Share on Tumblr

ALSO READ See latest News about Zenith Birla See previous management interviews See what other Experts & Brokerages are saying about Zenith Birla Zenith Birla BSE | NSE 31/05/12 Are Mutual Funds betting on Zenith Birla?

Galvanised and welded steel pipes & tubes maker Zenith Birla is looking to up capacity of its spiral mills and ERW pipes. It plans to invest Rs 300 crore for its expansion plans for which it has received its board's enabling resolution, said PVR Murthy, Group Director - Finance at Zenith Birla . The company is looking to invest in Greenfield and Brownfield plants to set up a steel plant and a new spiral mill. It has also planned a warrant issue on a preferential basis to its promoters.

The company had also raised Rs 100 crore via a GDR issue earlier.

In an interview with CNBC-TV18, PVR Murthy, Group Director-Finance, Zenith Birla outlined company's capacity expansion and fund raising plans.

Below is a verbatim transcript. Also watch the accompanying video.

zenithbirla_murthy_17aug

Q: Could you outline this expansion plan that you have in Greenfield and also in Brownfield and we understand you are looking to invest about Rs 300 crore, how are you going to be raising and funding this capacity expansion and also could you tell a little more about this right warrants that you have issued and how much will that raise?

A: Regarding the capex plans, we are making a new spiral mill with a capacity of 75,000 tonne which is being imported from Australia. We are also doubling the existing capacity of ERW pipes to another 1,50,000 tonnes.

We have already raised by way of GDR Rs 100 crore and that money is with us for expanding this operations. We made an enabling resolution to raise Rs 300 crore which we will raise at an appropriate time whenever the capex plans finally start visualizing. For the time being we have the money for the expansion which we have already planned.

Q: You spoke about raising Rs 300 crore. By when could we see this and what sort of route would you undertake for this?

A: This would take another 6-8 months once we complete the existing expansion plans we had of spiral mill and doubling of ERW capacity. After that we will go in for the expansion plans which would be 6-8 months.

We will be raising by way of rights issue, public issue or QIP and also by way of GDR that mode has still to be decided. We will take it as it comes.

The warrants are to be issued to the promoters. Basically our shareholding is less because of the recent GDR issue. We wanted to increase the promoters' shareholding. That is the reason why we are going for 10% warrants which will be converted into shares 5% this year and 5% next year.

Q: You have already raised about Rs 100 crore for capacity expansion. How much will that add to your revenues in FY11 currently. I think last year you all did about little less than Rs 500 crore. So what is the growth that we can expect in FY11?

A: Growth in FY11 will not be much. It will be 25% growth but the real results of the expansion will come in FY11 and FY12. This year we will increase the turnover by about 25% from last year and the gross margins also similarly by 25%.