Surana Industries Ltd, part of the Rs 2,500 cr Surana Group, is close to acquiring a coal mine in Indonesia to source coal for its steel plant at Raichur.
MUMBAI: Chennai-based steel company Surana Industries Ltd (SIL), part of the Rs 2,500 crore Surana Group, is close to acquiring a coal mine in Indonesia to source coal for its integrated steel plant at Raichur.
Munnoth & Co, a Singapore-based firm of chartered accountants, is doing the due diligence for Surana and will submit a report by December-end. Surana plans to acquire the mines early next calendar.
The company is setting up an integrated steel complex at Raichur, Karnataka with an investment of Rs 473 crore. The plant will manufacture special alloy steels and mainly cater to the needs of the high-growth auto industry in the country.
Dinesh Surana, managing director, SIL told DNA Money, “Our marketing team will start talking to automobile players once production from our new plant is commissioned. We will supply steel rods and other materials to automobile industries.”
The plant is expected to be operational in April 2008 and will create job opportunities for more than 3,000 people. It would have a 1.28 lakh tonne sponge iron plant, a 2.25 lakh tonne steel melting shop and a 2 lakh tonne rolling mill.
The company is also setting up a 35 MW captive power plant at a cost of Rs 120 crore at Raichur. The company has projected a turnover of Rs 1,200 crore and a net profit of Rs 100 crore in the first full year of the integrated steel plant going on stream.
Pawan Burde, analyst with Tower Capital & Securities, said in a report that once the Raichur Plant is operational, the company’s EBIDTA margins will improve substantially to around 25% and with captive iron and coal mining, margins could even reach a level of 30%.
At present, its EBIDTA margins stand at just 9.5% as the company follows the scrap route of steel manufacturing, which commands lower margin. The company currently operates two plants — one at Gummidipoondi (Chennai) and the other at Madhavaram.
It produces 1.09 lakh tonne of thermo-mechanically treated bars and 30,000 tonne of mild steel ingots annually at the Gummidipoondi plant. The Madhavaram facility has a capacity to manufacture 60,000 tonne of cold rolled products.
SIL has substantial marketshare in south India. For 2006-07, it clocked a turnover of Rs 778 crore and a net profit of Rs 30 crore.
The company has a windmill farm consisting of 8 windmills with a total capacity of 12 MW at Radhapuram in Tamil Nadu’s Thirunelvelli district. The windmills can produce 38 million units of power, which could help it save around Rs 10 crore per year on energy costs.
In the long run, SIL plans to set up a separate subsidiary to take over the power plant at Raichur as well as the wind mills at Radhapuram and run them as a separate entity. This would open up possibilities for largescale expansion keeping in view the growing demand for power in the country.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}