Vedanta to invest $300-400 mn to expand Electrosteel's capacity

Mumbai: Metals and mining giant Vedanta will spend around USD 300-400 million in recently acquired Electrosteel Steels to expand its capacity to 2.5 million tonnes per annum (mtpa), a top company official said.

This investment will be part of the company's overall USD 8-billion (about Rs 56,000 crore) capex plan over the next three years, according to Vedanta chairman Navin Agarwal.

"Electrosteel Steels is currently processing at a full capacity of 1.5 mtpa, and we will soon start work to expand capacity to 2.5 mtpa at a very nominal capex of USD 300-400 million," Agarwal told reporters on the sideline of the firm's annual general meeting (AGM) on Friday.

In March, Vedanta acquired assets of Electrosteel Steels, which marked its entry into steelmaking in India.

"Our acquisition of Electrosteel has lot to do with the integration of our iron ore business," said Agarwal.

Replying to a query on the firm's troubled copper smelter at Tuticorin in Tamil Nadu, Agarwal said, "At this time our endeavour is to restart the copper smelter and discussion of expanding will happen afterwards."

The Tuticorin plant has been closed since May after 13 people were killed in a police firing during protests against the plant on allegations of it causing health and environmental issues.

Meanwhile, the company has chalked out a mega capital expenditure plans of USD 8 billion over the next three years on growth projects across its businesses.

The company is looking at growing its oil and gas business to about 400,000 barrels per day, from the current 200,000 barrels per day.

Similarly, the zinc business will grow to about 1.35 mtpa. The company is also looking at growing its international zinc business and aluminium and alumina refinery capacities, the chairman said.

"We will be spending USD 8 billion across all our businesses. Most of this capex will be funded through internal accruals as our cash flows stood at Rs 7,900 crore (as on March 31) and we have reduced our gross debt by Rs 8,500 crore," Agarwal said, adding the company will not opt for external funding.

Following this expansion, he believes that the firm's business size will grow by around 50 percent.

Replying to a query on inorganic growth, Agarwal said, "We have nothing on the plate on the acquisition side, but if good opportunity comes, which is synergic to our business, we will look at it."

Vedanta had posted 2.13 percent year-on-year rise in consolidated net profit to Rs 1,533 crore in June quarter, while its total income increased to Rs 22,624 core.

The company's shares ended 4.26 percent up at Rs 223.95 apiece on the BSE on Friday, against 0.22 percent decline in the benchmark.