Mumbai, Feb 7 (UNI) Hyderabad-based Sujana Metal Products announced their Rs 1,600 crore two-phase growth plan that would increase the profitability to Rs 300 crore by 2011 through a series of expansion directives and acquisitions here today.

''Due to the growth of the Indian economy, we expect to see an increase in demand for infrastructure building materials like steel. The budget should also favour the industry through reduction of duties,'' Chairman Y S Chowdary said.

''We will focus our expansion plans on the entire southern part of India,'' he added.

Under the Company's expansion plan, the capacity will be increased from current capacity of 2.9 lakh tonnes to one million tonnes that will produce a variety of products from iron-ore to end products. Out of the million tonnes, 60 per cent will be for the construction industry and 40 per cent for engineering. The growth plan is expected to be completed by 2011 and Rs 800 crores have been allocated for each phase.

The first phase will involve a mix of capacity increase and backward integration, whereby the Company will increase its output from current 2.9 lakh tonnes to 7.3 lakh tonnes, out of which 1.2 lakh tonnes will be ready-to-use, one lakh tonnes of sponge iron and the balance in iron ore form and allied products.

The required funds for phase one have been raised through promoters' warrents-Rs 220 crore, internal accurals-Rs 130 crore and long-term debt of Rs 450 crore.

In the second phase, which will predominately be a backward integration exercise, the capacity will be increased by a further 2.7 lakh tonnes with a corresponding increase in product mix.

The Company has already acquired two Hyderabad and one Chennai based steel companies with a combined capacity of 2.2 lakh tonnes and one each from Chennai, Hyderabad and Vishakapatnam are currently under evaluation.

Sujana Steel is a part of the Rs 3,000 crore Sujana Group and acheived sales of Rs 3,100 crore in June fiscal year 2007.

UNI ZC NM AG1513