Electrotherm India Ltd on March 20, 2007 has announced that Venture Funds Management Company Ltd. has invested Rs 82 crore, through a private placement, to part fund its second phase of expansion plans of Rs 400 crores.
While ICICI Venture would subscribe to Rs 82 crores worth equity of the Company the promoters would bring in Rs 58 crores to meet the equity portion. Terms loans worth Rs 200 crores and internal accruals of Rs 60 crores would meet the balance funding requirements of the proposed expansion plan. KPMG Corporate Finance was the sole advisor for the transaction.
The Term Loans have been sanctioned and disbursed and the Company has already invested Rs 300 crores out of the total planned expenditure of Rs 400 crores.
Mr. Bhandari, of the Company said, "We are delighted have ICICI Venture as our equity partners in the Company. With its excellent understanding of the Indian environment, we are confident that ICICI Venture would bring its expertise to benefit our Company in the coming years."
The Company is an engineering and manufacturing Company with major strength in power electronics. With its core strengths in power electronics and project implementation, the Company set up a special steel products plant at Kutch in record time.
This plant has facilities to produce steel products, Stainless Steel products, Ductile Iron Pipes and other engineered and fabricated items. Leveraging its core strength in power electronics, the Company through its in house R&D facilities developed a battery operated scooter.
The Company is also in the process of establishing a waste heat power plant which will make the unit self sufficient in power. With its captive sponge iron, the Company is already well integrated and does not get affected by vagaries of fluctuating scrap market. The waste heat power plant as well as battery-operated vehicles will make the Company eligible for carbon credits.
For setting up the above facilities, the Company embarked on a capital investment plan of Rs 530 crores, in two phases. The first phase of Rs 130 crores, was implemented in a record time by Term Loans and accruals.
All the divisions of the Company have huge growth potential. The engineering and projects division is focusing on exports in a big way. The exports, which earlier accounted for 15% of the Company's turnover, will now increase to 35% in the current year and will further jump to 50% in next two years. In the past the Company has successfully competed with multinationals like ABB and GEC, and due to its superior product and better service, it commands a market share of nearly 50% in India. The Company is now looking at overseas market where it is even more competitive due to its ability to carryout detailed engineering at a fraction of cost generally incurred by engineering Companies in the west.
The composite steel product unit at Kutch, is producing quality bars, stainless steel and ductile iron pipes and product is now well established in the market. In a short time, the Company has become the leading supplier of these items. With the commissioning of structural mill, the Company will be able to supply structural steel for sophisticated applications, including transmission line towers.
The Company has also made a small beginning in the battery operated scooters segment. After the initial successful launch in Gujarat, the Company battery operated vehicles are now available practically all over the country. Looking at the overwhelming response from the consumers, the Company is ramping up its manufacturing capacity and building strong partnerships with vendors to roll out more than 150,000 vehicles next year.
ICICI Venture, incorporated in 1988, as a wholly owned subsidiary of ICICI Bank, is the largest and one of the most successful private equity and venture capital management Companies in India with funds currently under management in excess of Rs 9000 crores (USD $ 2 billion). Over the last 18 years, ICICI Venture has been successful in identifying trends well ahead of the curve; be it retail, media and entertainment, information technology, real estate or pharmaceuticals and biotechnology. ICICI Venture today has some of the best known and managed Companies in India in its portfolio delivering value consistently to its investors.
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