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Yes, if one were to look at the latest press statement by the Chairman of
Rashtriya Ispat Nigam Ltd (RINL). He has suggested that BHEL would be
their JV partner for putting seamless steel tube mill and silicon steel mill.
This is clearly a surprise to us. To recap, RINL is looking for funds to raise
its capacity to 11.5mnt steel plant from current 3mnt - which requires INR
350bn of funds (INR 225bn in debt and rest in equity). According to Mr.
Bishnoi's press statement, "RINL hopes to gather INR 105bn needed for the
expansion from its internal accruals, IPO and the possible JVs with BHEL
and SAIL. With SAIL, what we are conceiving and what we are telling them
is that the 4 Mt that we are putting up, we can do that in a joint venture
where SAIL will supply us the iron ore. The talks are in a nascent stage.
BHEL is more likely to happen, SAIL is further down the line. While the
details have not yet been listed, the ballpark figures for JV (with BHEL) are
the seamless tube mill which will cost around INR25bn. The silicon mills will
be around INR30bn. So,INR55bn would be where BHEL would be possibly
partnering. So, of INR55bn, 50 per cent stake would be of BHEL. But, we
haven't worked it out on the detail yet."
BHEL has historically supplied drives for steel mills
From the public statements of BHEL management, it has been picking stake
in power generation projects and it also wants to set up a finance arm to
help developers get funding. But so far none of the press statements from
BHEL management has ever suggested that they could be looking for taking
a 50% equity stake in steel projects. To recap, we always felt that the manner in which BHEL has pursued the JV projects with state electricity boards
was a great strategy. Firstly for BHEL, this ensured that they reach a critical
mass of super critical equipment - which would help them reach indigenisation level of above 70% - a critical hurdle for them to reduce the cost of
manufacturing. So while we still await the response from the BHEL management, the only probable reason that could be suggested is that BHEL
may be looking to get into equipment supplies for steel plants, also especially if that is for seamless tubes, Cold rolled grain oriented steel equipments. If this is indeed the strategy, then it looks quite similar to one been
pursued by one of its peers - an answer that we would know only in the due
course of time.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Yes, if one were to look at the latest press statement by the Chairman of
Rashtriya Ispat Nigam Ltd (RINL). He has suggested that BHEL would be
their JV partner for putting seamless steel tube mill and silicon steel mill.
This is clearly a surprise to us. To recap, RINL is looking for funds to raise
its capacity to 11.5mnt steel plant from current 3mnt - which requires INR
350bn of funds (INR 225bn in debt and rest in equity). According to Mr.
Bishnoi's press statement, "RINL hopes to gather INR 105bn needed for the
expansion from its internal accruals, IPO and the possible JVs with BHEL
and SAIL. With SAIL, what we are conceiving and what we are telling them
is that the 4 Mt that we are putting up, we can do that in a joint venture
where SAIL will supply us the iron ore. The talks are in a nascent stage.
BHEL is more likely to happen, SAIL is further down the line. While the
details have not yet been listed, the ballpark figures for JV (with BHEL) are
the seamless tube mill which will cost around INR25bn. The silicon mills will
be around INR30bn. So,INR55bn would be where BHEL would be possibly
partnering. So, of INR55bn, 50 per cent stake would be of BHEL. But, we
haven't worked it out on the detail yet."
BHEL has historically supplied drives for steel mills
From the public statements of BHEL management, it has been picking stake
in power generation projects and it also wants to set up a finance arm to
help developers get funding. But so far none of the press statements from
BHEL management has ever suggested that they could be looking for taking
a 50% equity stake in steel projects. To recap, we always felt that the manner in which BHEL has pursued the JV projects with state electricity boards
was a great strategy. Firstly for BHEL, this ensured that they reach a critical
mass of super critical equipment - which would help them reach indigenisation level of above 70% - a critical hurdle for them to reduce the cost of
manufacturing. So while we still await the response from the BHEL management, the only probable reason that could be suggested is that BHEL
may be looking to get into equipment supplies for steel plants, also especially if that is for seamless tubes, Cold rolled grain oriented steel equipments. If this is indeed the strategy, then it looks quite similar to one been
pursued by one of its peers - an answer that we would know only in the due
course of time.
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