TOWARDS INTEGRATION: Production line of TMT mill of Surana Industries at Gummudipoondi

CHENNAI: Surana Industries, a listed company, is setting up an integrated steel complex at Raichur in Karnataka, at a cost of Rs. 473 crore.

Talking to this reporter, Dineshchand Surana, Managing Director, said the project for manufacturing special steel would comprise a sponge iron unit, a steel melting shop and a captive generation unit. The company was also setting up an arc furnace in the same premises to produce special steel billets, catering specially to the automobile and allied industries, he added.

With the south emerging as an automotive hub, the company could easily market the entire production of special steel without any difficulty, as the current capacity of 1.33 lakh tonnes visualized in the first phase worked out to only five per cent of total demand in the country.

The integrated plant could produce 1.28 lakh tones of sponge iron and 1.37 lakh tones of steel melting shop for ultimately producing special steel. The unit would be capable of producing about 400 products required by the automobile industry, Mr. Surana said. For meeting the total cost of Rs. 473 crore, the company is planning to raise about Rs. 331 crore through term loans from banks. The balance would be funded through an additional issue of equity shares at a premium.

V.M. Swami, Director (Finance), said the company would file a draft prospectus shortly and would come out with a second public offer by the middle of this year. Surana Industries came out with an initial public offer to raise Rs. 15.50 crore at a price of Rs. 20 per share in 1995.

Surana Industries took a press team to its existing plants at Gummudipoondi and to the newly installed wind mill farm near Kanyakumari. The plant at Gummudipoondi manufactures thermo mechanically treated bars (1.09 lakh tones), cold twisted deformed bars, mild steel rounds, mild steel structurals and mild steel wires. The unit at Madhavaram, Chennai, is producing 60,000 tonnes of cold rolled products. By way of backward integration, the company installed the induction furnace last year at a cost of Rs. 6 crore. As a result of the installation of the induction furnace, the company's requirement of power has gone up substantially and the Gummudipoondi plant would be able to run only at 50 per cent capacity. The company will now be able to cut cost by about Rs. 12 crore and operate the Gummudipoondi unit at full capacity without interruption.

With the availability of power from the State grid through the wind mill farm with a capacity of 12 MW, the company will now able to produce 38.60 million units annually.

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