Vikash Metals to raise funds via rights issue for new plant

In an interview with CNBC-TV18, Akash Patni, executive director of Vikash Metals, spoke about the latest happenings in his company and the road ahead.

Below is a verbatim transcript of the interview. Also watch the video. Q: Can you just take us through the details with regards to your rights issue? How much are you planning to raise? When will it hit the market and how exactly will you be utilising these funds?
A: We are proposing for a rights issue and we would consider the same in the board meeting that has been fixed up for May 30. Right now this is the only information that I can share with. Q: Can you just tell us the total amount you will actually need in terms of fund requirements for the company? It could be via rights issue or any other means and how exactly would you be deploying those funds?
A: The rights issue and any kind of fund raising that the company is proposing to make is for backward integration, wherein, we are proposing to set up a pelletisation project. The requirement would be somewhere around Rs100 crore to Rs125 crore, which would be a combination of rights issue and unsecured loans as well as may be private participations. Q: If there is private participation, how much of a stake are you willing to divest perhaps in the company? And also how much of it is going to be coming via debt?
A: All those figures, as I said, we would be considering it in the May 30 board meeting wherein we are looking at all the expansions that we are taking care of. It is during that we decide about the equity dilution as well as the debt portion that we are looking at. Q: And if you do undertake a backward integration, what is the plan and how much will it augment your revenues and more importantly your operating margins which are pretty low?
A: It is very important at this stage to have backward integration and we already have coal linkages with MCL and Eastern Coalfields Limited (ECL) and the pelletisation proposal that we are proposing to be discussed and considered in the board meeting on May 30, is basically to secure ourselves with the iron ore requirement of the company considering there are ample avenues for iron ore finds within the country and within the state.
So, this will definitely have a lot of impact on the profitability of the company and we are expecting to save around 40-50% on the raw material cost. Q: Can you give us an update on this BSE announcement with regards to revenue generation from carbon credits? How much of a potential do you see from this ahead?
A: Vikash Metal would be one of the first few companies from the state of West Bengal and Eastern India to actually trade in carbon credits in the international market. We are expecting somewhere around Rs 50-60 millions in the current year and years to go ahead. We would be generating roughly around 55,000 units of carbon credits by this year. Q: Tell us what sort of flow would we expect in terms of a quantum, in terms of money? Can you just give us how much we could expect in FY12 quickly?
A: We have already appointed the verifiers who have credited with United Nations Framework Convention on Climate Change (UNFCCC). We are hopeful to generate somewhere around 55,000 units, depending upon the market prices, anything between Rs50-60 million would be the target for this year.