RPG Cables in expansion mode, infuses capital

KOLKATA: The Goenkas of RPG Enterprises are looking to build capacities of RPG Cables. The company also plans to enhance the low tension and power cables capacities produced at its Silvassa and Mysore units, respectively. This apart, the company may set up a greenfield high-tension manufacturing facility outside Mumbai to cash in on the booming power cables business.

When contacted, RPG Cables managing director Nikhil Gupta said, “The expansion plans for Silvassa and Mysore units have already been initiated, but no decision has been taken on the proposed greenfield venture.”

The company already produces high tension cables at its Thane unit (Mumbai). No other details in terms of percentage increase in capacities or project cost were available. Incidentally, the company’s board on Monday cleared a capital infusion of Rs 151 crore through a combination of debt and equity by Deutsche Bank AG Hong Kong. The promoters, too, have agreed to infuse Rs 22 crore into the company as part of the overall financial restructuring package.

Deutsche Bank AG has been allotted some 500 fully-convertible debentures aggregating Rs 28 crore and amounting to some 14.9% of RPG Cables’ expanded equity capital. The bank has also extended working capital facilities to RPG Cables.

Elaborating on the restructuring scheme, Mr Gupta said: “Existing lenders have agreed for a one-time settlement which will help reduce the company’s borrowings by over Rs 100 crore.” Total debt burden of the company is pegged at Rs 250 crore. Implementation of the restructuring package will also help the company reduce its interest burden by Rs 12 crore annually.

Promoters’ holding will dip to 34% on an expanded capital of Rs 40 crore from 44% now. RPG Cables — with interest in a wide range of cables for the power cables and manufacturing facilities at Thane, Silvassa and Mysore — is also looking to sell off its surplus 10 acres in and around the existing Thane unit covering 17 acres. Proceeds from the same will be used to further reduce debt burden, Mr Gupta said.

If the demand for power cables continues to grow in coming years, the company hopes to clock a turnover of Rs 500 crore by 2009-10 fiscal compared to Rs 180 crore in the year ended March 31, 2007.