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NT Bureau
Chennai, June 20:

        Surana Industries Ltd (SIL), the city-based manufacturer of steel and part of Rs 2,500 crore Surana group, has come out with foreign currency convertible bonds (FCCBs) to the extent of $25 million which would be utilised as part of equity source for its Raichur integrated complex.

        The first tranche of $14 million was fully subscribed and the second installment of $11 million would be taken up by the investors in another ten days. The steel plant at Raichur coming up at total cost of Rs 473 crore was funded by a mix of term loans of Rs 331 crore and equity sources worth Rs 142 crore. The issue of FCCBs was for contributing to the equity source. The bonds would be converted into equity share at a price of Rs 140 per share.

        'The successful launch of the FCCB indicates the confidence of global investors in the management of our company. The money raised through FCCB will enable us to fasten the progress of work at our Raichur project,' said Dinesh Surana, managing director, Surana Industries Ltd. With the success of the issue, the company would now go in for raising funds by way of qualified placements for $25 million to meet the cost of future expansion. SIL has recorded a turnover of Rs 778 crore for the year ended March 2007 with net profit at Rs 30 crore.

        The steel complex at Raichur would mainly produce Special Alloy steel which have applications in the automobile industry and the commercial production of the plant was expected to commence by the end of 2008. After the setting up of Raichur plant, the turnover of the company would exceed Rs 1,200 crore and the net profit would touch Rs 100 crore.

        SIL has taken possession of 300 acres of land allotted by Karnataka Industrial Areas Development Board and the Raichur project was on progress with major equipment being installed at the site.

        Having began operations in 1991, SIL commissioned its first plant at Gummidipoondi in 1994 and the Madhavaram plant in 2000. While the Gummidipoondi plant is a rolling mill with a capacity of 1.09 lakh tonnes per annum, the Madhavaram plant turned out cold rolled products received from Rashtriya Ispat Nigam Ltd.

        When the company installed the Induction Furnace with a capacity of 30,000 mild ingots from the scrap at the Gummidipoondi facility in 2004-05, the power consumption went up substantially. But soon the company installed eight wind mills in Tirunelveli district at a total cost of Rs 81 crore with 12 MW capacity for captive utilisation. 'As a result of the wind mills, we are able to conserve our energy costs to the tune of Rs 10 crore as we are using the same for captive consumption,' said Dinesh Surana.

        The total paid-up capital as on 31 March 2007 was Rs 17 crore as against Rs 15.5 crore for the previous year. The net worth of the company as on 31 March 2007 was Rs 156 crore as against Rs 92 crore for the previous year. The increase in net worth was due to two main factors — the promoters contribution with a premium and plough back of profits.