Indian steel manufacturer, Sujana Metal Products, to invest Rs 1,000 Cr in its production

Indian Steel manufacturing company, Sujana Metal Products, Sunday announced it plans to invest more than Rs 1,000 crore in expansion of its operations. The plans will see the company grow its capacity to 7.5 lakh tons per annum, up from its existing 3.5 lakh tons, to be effected by end of the 2010 financial year. According to a statement from senior officials in the company, it would seek investments aimed at doubling its rolling production capacity in its range of steel products.


The statement further clarified that the company would be seeking both organic and inorganic modes for the planned investment in expansion. Sujana has built a reputation in the manufacture of a wide range of mild steel long products. R. K. Birla, Sujana Managing director, noted the crucial role the company plays in the Indian secondary rolling sector, confirming that the company was expanding its rolling capacity by the 2011 financial year.


Further, he said the investment for the envisaged expansion is currently put at Rs 800 crore, reiterating that, as it is currently, Sujana Metal Products had already invested Rs 500 crore for its backward and forwarding integration and the Rs 300 crore remainder is to be invested by end of this year. Subsequently, it is hoped that the company’s rolling capacity will be enhanced by April 2011.


Sujana Metal Products will undertake the investments with funds from equity promoters, internal accruals and long term debt, with an additional sponge iron unit to be acquired by the company in the State of Andhra Pradesh in a period of three to four months. Birla said Sujana is keen on modernizing its Andhra Pradesh facility in a move expected to take its annually capacity up from the existing 60,000 tons.


An additional Rs 60 crore investment will be undertaken in a power plant by end of 2010 in the state. He reiterated that Sujana will build a facility for the manufacture of billets from iron ore at an estimated Rs 150 crore, as part of its backward integration plans and the facility will commence operations by end of 2010,  with about 3 lakh tons as its initial capacity yearly.


Sujana is currently biasing its operations on backward and forward integration, given the competitive nature of the sector, Birla said, adding that more focus will however be put on backward integration. Sujana is also pondering a venture into the mining business, with the announcement that at least one mine will have been acquired within the coming six months.


12 July 2010.