Mumbai: Steel pipemaker PSL Ltd plans to raise $50 million through external commercial borrowings and is also mulling equity options to raise funds, a top official told Reuters on Tuesday.
The company will use the money to expand its domestic capacity to cater to new gas projects by Reliance Industries and GAIL India among others, managing director Ashok Punj said over the telephone.
“We are in the process of raising funds through ECB and perhaps equity too but we have not decided on equity funding yet,” Punj said.
The firm, which has a total order book position of Rs3,800-4000 crore, has bid for several new projects both in India and abroad and hopes to win new orders over the next 3-5 months, Punj said.
It expects to win 2-3 mega-projects from GAIL and is also bidding aggressively for offshore pipeline coating contracts, he said.
“The time between now and three and five months will see fruition of most of these projects.”
The pipemaker is tapping demand from the US through its units in West Asia, which has a total capacity of 300,000 tonnes per annum and the US. Both the units now handle half the company’s total orders.
However, Punj sees FY10 growth slowing compared with last year as the first quarter was lull but still expects a “healthy” topline growth.
“The first quarter has been a little slow in terms of tendering and order processing. Particularly in some state governments, there has been a temporary slowdown, which we see now coming to an end,” he said.
PSL posted a marginal rise in net profit to Rs85.93 crore in the year-ending March 2009 on a 57% growth in net sales.
The firm, which has a capex of about $75 million for FY10, plans to set up a new greenfield project overseas to cater to the rising demand for oil and gas pipelines.
The project, if approved, will be funded via equity, Punj said.
“In the next 3-4 months we’ll be announcing a new unit in at least one of the regions where we are not present. We are waiting for some bids to be evaluated, and orders to be received and then we’ll take a call on at least one new location,” he said.
Shares in the firm ended down 3.2% to Rs137.85 in a choppy Mumbai market.