RINL may spend Rs 2,000 cr for capex in FY'14
Hyderabad: Rashtriya Ispat Nigam Limited, the corporate entity of Vizag Steel, may spend Rs 2,000 crore in the next financial year towards capital expenditure, a senior official of the steel maker said.
The official also said the proposed Initial Public Offer (IPO), which was deferred last year, may take place in the second quarter of next fiscal if the process is initiated.
"We are allotted a captive iron mine in Rajasthan. We are also looking one in Andhra Pradesh. If they materialise, then we will be spending Rs 2,000 crore. As it it is, we have plans to spend Rs 1,200 crore without taking them into account," the official said requesting anonymity.
He said the Rajasthan state government has allotted 1,000 acres mine and sent the proposal to the Union Ministry of Coal for approval.
"It is a low-grade iron ore magnetite. There will be 300 plus million tonnes estimated reserves available in the mine," he added.
Regarding the IPO, he said as of now there is no indication from the government on when the issue will be taken up. However, going by the opinion of the Department of Disinvestment, the process may again start in July or August this year.
The funds from the proposed IPO are meant for the government coffers as part of disinvestment plan.
The government indefinitely deferred RINL's IPO due to differences with the merchant bankers over the price band of the issue.
"We have Navaratna status till November 30 this year. They may start the process by July or August. By that time some more units of RINL are expected to commission. By that time, markets are also expected to consolidate," the official said.
Regarding the delayed expansion of the company, after which RINL's steel making capacity will increase to 6.3 million tonnes per annum (MTPA), from the existing 3 MTPA, is now expected to be completed by next year-end.
By 2013-14, RINL is expecting the steel making shop to be ready. By the end of next fiscal, capacity expansion can be done physically but it will not be able to reach 100 percent utilisation.
"By 2014-15, we will be able to ramp up production by 90 percent to the capacity. By 2015-16, we will be able to reach 100 percent," he said.
The company is currently working on modernisation of the existing plant which will add one million tonne liquid steelmaking capacity to the existing 3 MTPA.