WS Industries achieves financial closure for its new plant

Venkatachari Jagannathan
08 December 2006

Chennai: The Chennai-based power insulator major WS Industries (India) Limited has achieved financial closure for its proposed Rs110 crore export oriented plant. According to M Ganesan, executive director, corporate finance, the company would raise debt totalling Rs60 crore from two leading institutions. "The balance outlay of Rs50 crore will come from internal accruals and equity."

The greenfield project is warranted as WS Industries recently signed a technical and marketing agreement with the US-based PPC Insulators whereby the American company would source substation insulators up to 171 kV for overseas markets. WS Industries Chennai facility caters mainly to the domestic market with some capacity used for exports.

Says managing director Narayan Sethuramon, "We have already started selling to PPC Insulators. During the first half of the current fiscal exports in general amounted to Rs20.39 crore."

Nearly 90 per cent of the new plant's production will be exported. As such the plant would mostly come up in Vishakapatanam in Andhra Pradesh where a special economic zone is being set up. The other advantage of Vishakapatanam is the availability of gas to fuel the plant. It should be noted that the fuel cost accounts for 18 per cent of the insulator's cost. And if the furnace is fired using gas then the fuel cost comes down by nearly 8 per cent. Further exports will be much easier if the new plant comes up in a port city.

The company, which has a Rs21.13-crore equity base is also looking at other locations in Gujarat and Tamil Nadu. "We have placed orders for the plant and machinery," says Ganesan. The plant and machinery would cost around Rs60 crore and the land, building and civil works is expected to consume around Rs35 crore. "The balance Rs15 crore will be for working capital requirement and others."