Mumbai: Welspun Gujarat Stahl Rohren, one of the largest steel pipe makers in India, has decided to increase the capacity of its pipe plant by 75% to 1.75 million tonnes to meet growing demand for oil pipelines.
The expansion is estimated to cost the company Rs 1,100 crore, which will be funded through a mixture of debt and internal accruals, company president Akhil Jindal told ET. "About Rs 800 crore will be through debt, while the rest will come from our accruals," he said adding that their borrowing cost has been pegged at about 10%.
Prices of line pipes have grown sharply over the past year to $1,900 per tonne, from the previous $1,600. Even the rates of steel plates, which the company recently started producing, has gone up to $1,600 per tonne from $1,300 over the past year. "Our current order book, which is worth Rs 7,700 crore, has been decided on previous steel prices. So, our current order book will not be affected this year," said Mr Jindal.
The company expects to temporarily shut its plate production in October-November for 15-20 days to start production of coils.
Welspun Gujarat had invested Rs 1,600 crore last year for a plate and power plant, of which Rs 1,250 crore was taken as debt at 9%, while Rs 450 crore came via equity. "We will break-even in plate and coil production by the end of the current fiscal year," Mr Jindal said.
The company will export 40% of its plates to Europe due to growing construction demand, while the rest would be used for internal purposes. Out of the total capacity of plate and coil production in Anjar, Gujarat, 80% will be used for plates and 20% will be used for coils.
The expansion is estimated to cost the company Rs 1,100 crore, which will be funded through a mixture of debt and internal accruals, company president Akhil Jindal told ET. "About Rs 800 crore will be through debt, while the rest will come from our accruals," he said adding that their borrowing cost has been pegged at about 10%.
Prices of line pipes have grown sharply over the past year to $1,900 per tonne, from the previous $1,600. Even the rates of steel plates, which the company recently started producing, has gone up to $1,600 per tonne from $1,300 over the past year. "Our current order book, which is worth Rs 7,700 crore, has been decided on previous steel prices. So, our current order book will not be affected this year," said Mr Jindal.
The company expects to temporarily shut its plate production in October-November for 15-20 days to start production of coils.
Welspun Gujarat had invested Rs 1,600 crore last year for a plate and power plant, of which Rs 1,250 crore was taken as debt at 9%, while Rs 450 crore came via equity. "We will break-even in plate and coil production by the end of the current fiscal year," Mr Jindal said.
The company will export 40% of its plates to Europe due to growing construction demand, while the rest would be used for internal purposes. Out of the total capacity of plate and coil production in Anjar, Gujarat, 80% will be used for plates and 20% will be used for coils.
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