Sujana Metal to invest Rs 8,000-mn for expansion

Hyderabad: Sujana Metal Products Ltd (SMPL) will be investing Rs 800 crore by June 2010 on expansion, modernisation and backward integration projects.

“Out of the total investment, Rs 370 crore will be used for two greenfield projects, Rs 100 crore for modernisation of the existing units and the rest, Rs 330 crore, will be utilised for working-capital requirements,” Mr Y.S. Chowdary, Chairman, Sujana Group, said at a press conference here.

SMPL is currently in the process of setting up sponge iron and billet plants in Chennai and Hyderabad. “The Chennai unit will have a capacity of three lakh tonnes and will require an investment of Rs 200 crore. The Hyderabad unit will have a capacity of 2.5 lakh tonnes and we are looking at investing Rs 170 crore,” he said.

Out of the total investment required, it would raise Rs 470 crore through term loans while Rs 130 crore from internal accruals. Mr Chowdary said the balance Rs 200 crore will be the promoter’s contribution.

SMPL has also acquired three steel units — Saritha Steels, Glade Steels and Sree Ganga Steels — located in Visakhapatnam, Hyderabad and Chennai. The total cost of the acquisitions was Rs 180 crore, Mr Chowdary said.

In the last 12 months, SMPL has acquired five companies with the other two units costing Rs 90 crore. “The latest acquisitions are in line with the strategy to enhance the capacity to one million tonnes per annum through acquisitions and expansions,” he said.

The current production capacity of the company is 7.28 lakh tonnes per annum which has been enhanced from 2.9 lakh tonnes last year.

SMPL has manufacturing facilities located in Hyderabad, Visakhapatnam and Chennai.

For the current financial year (July 2007-June 2008), SMPL has targeted a turnover of Rs 1,500 crore and a profit after tax of Rs 39 crore. For the first nine months of the current financial year, the company’s turnover was at Rs 1,100 crore.

Mr Chowdary said by the end of 2010 fiscal the company has targeted a sales of Rs 3,100 crore with a profit of Rs 300 crore.

“We are also looking for more acquisitions and also have applied for an iron ore mine in Karnataka. We expect to get the necessary clearances in the next six months,” he said.