Zenith Birla's Khapoli plant to push topline to Rs 600 cr by 2010

New Delhi, Oct 11 (UNI) The Yash Birla group owned steel pipe manufacturer Zenith Birla (India) Ltd today said its new mechanical tube (CDW) manufacturing plant at Khapoli near Pune requiring an investment of Rs 97 crore, will push its topline growth to Rs 600 crore by 2010, once the plant becomes operational in November next year.

The company, with a topline growth of Rs 300 crore last year, today also announced a follow-on-public issue to raise Rs 131 crore to partly fund the plant, which will have a capacity of 60,000 tonnes per annum (tpa), taking the total capacity of the company to 1,80,000 tpa. The balance will be used for other capital expenditure.

At present, the company has an installed capacity of 1,20,000 tpa, of which half comprises galvanised iron for standard pipes, used in plumbing, agriculture and construction, and makes steel pipes to carry water and machine tools.

''To leverage the great potential which the automotive and oil and gas sectors have thrown open, the new plant will primarily cater to mechanical (CDW) tubes meant for automotive purposes, and will equally cater to the domestic and export markets like Europe and the US which we will be foraying into,'' Zenith Birla Executive Director Arun Jain told reporters here.

The company has chalked out an extensive growth plan till 2009, which includes increased focus on ERW pipes used in construction, agriculture, industrial and engineering applications etc, as well as API tubes (exported to US and Middle East) and mechanical pipes used for the auto, oil and gas industry. Tubular products will be the major growth drivers of the company.

Mr Jain added that there was a huge shortage of mechanical pipes evident from the fact that India transports a mere 30 per cent of oil and gas through pipelines, as against 70 per cent transported through roads. ''This is an inefficient way of transportation and creates a huge gap between demand and supply of CDW pipes, which we want to do away with,'' he said.

He added that the existing 32,000 kms of pipelines in India will double in the next three years.

The company directly supplies steel pipes to Bajaj for its three-wheeler Chasis, Tata and Kinetic. About 30-40 per cent of the steel it consumes for manufacturing purposes is imported primarily from Ukraine, followed by Egypt and China, while its majority domestic suppliers of steel are Essar, followed by Ispat and SAIL.

The public offer is for 2.38 crore equity shares of Rs 10 each at a price of Rs 55 per share.

The issue will open on October 16 and close on October 20. At present, the promoters have a 33 per cent share in the company.

Post-issue, their holding will go down to 25 per cent.

IDBI Capital Market Services and Keynote Corporate Services are the lead managers to the issue.

The company, which has a turnover of Rs 320 crore, reported operating margins for the first quarter ended June, 2006, at Rs 275 crore, while its net profit was Rs 3 crore.

The Yash-Birla group with an annual turnnover of Rs 2,300 crore also owns other companies like Birla Power Solutions Ltd, 3M India Ltd and Birla Kennametal Ltd.

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