State to pump in ₹3,000 crore to kick-start Kadapa steel
The Hindu | Nov 19, 2020
JV partner will have to buy the government stake later.
With just over three years remaining for the targeted completion of establishment of an integrated steel plant in Kadapa district, the Andhra Pradesh government decided to infuse an equity capital of ₹3,000 crore in the joint venture (JV) company to kick-start the ambitious project with a rider that the JV partner should eventually buy out the entire stake.
The above condition is being imposed because the government has basically no intention to be in the business of steel-making and it can’t afford to make the huge investment that is required.
While talking to a host of banks and NBFCs through SBI Caps, which has been roped in as the transaction advisor, for raising funds towards its equity contribution, the government is negotiating with interested JV partners to bring in as much investment as possible.
“We have set March 31, 2024 as the Commercial Operations Date (CoD) but considering the difficulty for private companies to make investments at this critical juncture, it has been decided to pump in the initial equity. The process is under way. Hopefully, things will materialise by year-end,” said AP High Grade Steels Limited MD S. Shan Mohan.
Mr. Mohan told The Hindu that the installed capacity was 1.50 million tons, for which iron ore would be sourced from the National Mineral Development Corporation, and essential infrastructure was being created.
The JV partner would most likely procure machinery from SMS Paul Wurth, Daniele or Primetals Technologies, world’s leading manufacturers of steel-making equipment such as the blast furnace and steel melting processes.
The plant would be providing direct employment to 3,000 persons and indirect employment figure could touch 12,000. The environment impact assessment report is being prepared to obtain the mandatory clearances from the Ministry of Environment, Forest and Climate Change.