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To raise direct reduced iron capacity to 1.7 million tonnes
U.S.-based PE Fund Apollo Global
to pump in
MUMBAI: Welspun Maxsteel (WMSL) on Wednesday announced a Rs.5,300-crore expansion plan, including raising DRI (direct reduced iron) capacity to 1.7 million tonnes annually, even as the Welspun Group said the U.S.-based private equity fund Apollo Global has agreed to pump in Rs.2,250 crore into various group companies.
“We are planning to invest Rs.5,300 crore towards raising our DRI capacity from 9 lakh tonnes to 1.7 million tonnes annually. A part of this proposed investment will be spent for entering the high-end steel slabs segment, and set up a 330 MW captive power plant,” WMSL Executive Director and Chief Executive V. S. Bapna told reporters here.
“We are hopeful to begin the expansion work on our DRI plant as early as October,” Mr. Bapna said, and added that the proposed high-end steel slabs unit would come up near the WMSL's existing natural gas-based DRI plant in Maharashtra.
“Apollo will invest up to $500 million in various Welspun group, mainly in Welspun Corp (WCL), Welspun Infratech and Welspun Maxsteel, “Welspun Group Chairman B. K. Goenka said, adding this transaction was expected to be completed by August 12.
After this PE infusion, the debt-equity ratio of WMSL would stand at 35:65, Mr. Bapna said.
On raising funds for the Rs.5,300-crore expansion, Mr. Bapna said WMSL would raise a part of this fund by selling 87.5 per cent (worth about Rs.805 crore) equity to WCL, and 12.5 per cent or the entire promoter stake will be acquired by Apollo for Rs.140 crore.
The U.S. firm has also agreed to make an additional Rs.130 crore investment towards capital expenditure in WMSL.
The balance would be raised through debt. The company was also planning to divide its captive jetty into two arms for catering separately to steel and coal, Mr.Bapna said. — PTI
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