Shashwat to invest Rs 250 cr to raise refractory capacity

Mumbai, June 1 (UNI) Shashwat International Ltd (SIL), a part of the Orind Group with a presence in over 40 countries across the globe, has firmed up plans to hike its refractory capacity to 3,00,000 mtpa from the current level of 80,400 mtpa with an investment of Rs 250 crore.

With this capacity expansion, SIL will emerge as the second largest refractory producer in the country, according SIL Chairman Ravin Jhunjhunwala.

Speaking to UNI, Mr Jhunjhunwala said the company has plans to become the largest refractories manufacturer in Asia with its plant in China, Hong Kong and Singapore.

The overseas operations of Mr Jhunjhunwala are held in a joint venture between Mr Ravin Jhunjhunwala and Mr L N Mittal of Mittal Steel, the leading steel manufacturer in the world. Minivet Ltd, an FII in the Indian market being advised by Smith Advisory, recently picked up a stake worth USD 3 million in SIL, amounting to five per cent of the total paid up equity of the company, he pointed out.

Elaborating, Mr Jhunjhunwala said SIL currently operates two refractory manufacturing facilities in West Bengal and Gujarat. As part of the capacity expansion, he said the company proposes to increase manufacturing capacities at its West Bengal and Gujarat unit and by acquisition of a large refractory unit in Orissa.

To fund the expansion, he said the company plans to divest upto 40 to 45 per cent of its stake. Currently, the promoters hold 95 per cent equity, after a private equity (Minivet) picking upto five per cent in SIL. Replying to a question, Mr Jhunjhunwala said of the Rs 250 crore expansion, debt component will be around Rs 90 crore and the remainder is to come in the form of equity, which could be both IPO as well as the private equity.

SIL belongs to the Orind Group, in refractories (especially Magnesia Carbon Bricks) with its China plant being the largest exporter of refractories in China.

Post-acquisition of assets of Orissa factory and post expansion at its existing facilities by March 2007, SIL will have a combined capacity of 3,00,000 MTPA making it the second largest refractory producer in the country.

Giving a macro picture, Mr Jhunjhunwala said the size of the Indian refractory industry is estimated at about 950,000 tonnes valued at Rs 2000 crore (dollar equivalent of 444 million). The demand for refractories is expected to grow at a CAGR of 7-8 per cent over the next 5 years buoyed by the bullish growth in its end user industries, namely steel (CAGR of 9 per cent over the next 5 years) and cement (CAGR of 8 per cent over the next 5 years).

UNI SN MJ AG1913