To invest Rs 7,200 cr in in West Bengal: Adhunik

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Adhunik Metalik See previous management interviews See what other Experts & Brokerages are saying about Adhunik Metalik Adhunik Metalik BSE | NSE 10/02/12 Are Mutual Funds betting on Adhunik Metalik?

Alok Sharda , CFO of Adhunik Metaliks told CNBC-TV18 that the company is looking to set up 1.1 mt integrated steel plant in West Bengal and invest Rs 7,200 crore in next 4 years.They are also looking to diversify into cement and planning to set up 1 mt capacity.

 

Excerpts from the exclusive interview with Alok Sharda:

 

Q: Start off by telling us the capex that you have laid out for FY08 and the plans in West Bengal because you are looking at an investment of nearly USD 1.5 billion in that state?

A: In Adhunik Metaliks, the capex is almost on the completion stage and the second phase of Rs 437 crore. We have started major part of the project and we are completing the balance by Feb-March whereas in the coming quarter we will be completing the entire project.

 

We have just signed the MoU with West Bengal Government, which is on the drawing board but that is not coming in the listed company, it will be coming in the group company.

 

Q: You raised Rs 100 crore from Clearwater Capital Partners, allotted 8.2 million fully convertible debentures at about Rs 122.6 and you have also agreed to hike your FII investment to 49%, so much more fund raising you need to do for FY08-09 and what route are you going to approach for it?

A: In '08-09 beside Clearwater, we have raised equity through issue for warrant to promoter from where Rs 13 crore has come and another Rs 117 crore is expected to come in next two years time.

 

Q: Market is expecting that from your current 2.5 lakh tones/ annum carbon steel, you will move on to a capacity of 4.5 lakh tones, so by when will that capacity expansion happen? In terms of power how much would your generation or out put go up to?

A: The capacity is getting completed in next quarter itself and from next quarter, we will have 4.5-lakh tonne capacity available with us. As far as power is concerned, we already have 17 MW running and another 17 MW is coming by next quarter itself, so we will have 34 mega watt of captive power plant in the steel business.

 

Q: You are investing about Rs 7,200 crore in West Bengal State, so how much time will it take for the integrated steel plant to come up and how much would that change the financial picture of the company?

A: That is coming under the Adhunik Group and not under the listed company where we are proposing to set up that capex. It will take 3-4 years for the entire project to come up and stabilize.

 

Q: So for an FY09 perspective for Adhunik Metaliks particularly, what will be the financial picture and what you are targeting in terms of sales and profits?

A: In FY09, we are looking at steel business contributing Rs 1,500 crore and our subsidiary in the form of mining business should contribute more that Rs 300 crore of turnover. On the profit side, we should be doing an EPS atleast of Rs 25-27.