PUNE, July 7: Finolex Industries is preparing itself to raise $30 million through external commercial borrowings (ECBs). It raised $9.6 million through external borrowings a fortnight ago.

Group chairman PP Chhabria said that external borrowings offered funds at a low cost. The group raised the first five-year loan at a cost of 6.64 per cent from the Belgian Kredietbank.

Chhabria said the 10-year second tranche would carry a higher rate of interest.

The group plans to expand its polyvinyl chloride resin capacity by 70,000 tonnes. Commercial production is expected to begin in two years' time. The company has received clearance for its 25mw captive power plant at Ratnagiri. The proposed $30-million ECB, which is expected to come through in the next three months, will part-fund the expansion and the power plant, the total cost of which is projected at under Rs 200 crore. The rest will be raised internally.

Finolex's capacity will be raised gradually to reach 350,000 tonnes by 2002. The company, which recorded a lower tunrover of Rs 576.78 crore for 1996-97 over the previous year, expects to save on interest and power costs through its moves. The Rs 464-crore Finolex Cables, the flagship company, is expanding its product portfolio to include light-duty cables, which find applications in the consumer durables segment. This effort, Chhabria said, would make the group less dependent on government departments like the telecom. Finolex Cables will also double its capacity at Urse and Pimpri and launch its local area network cable by September 1997.

Finolex Cables will set up a separate factory at Goa for the manufacture of high-voltage power and light-duty cables at an investment of Rs 80 crore spread over two years. In a move aimed at integrating its PVC resin usage, Finolex Cables has created a subsidiary of a joint venture, Finorama, a 50:50 joint venture between Finolex Cables and Israeli firm Palaim. Finolex Cables now holds 60 per cent in the subsidiary, and the products it will introduce seek to replace asbestos with PVC. Finolex Cables is among the bidders for a 180mw power plant to be set up at Ratnagiri under the state government's scheme of private power plants. The bids are expected to be opened in August. LPG storage facility proves a money-spinnerFinolex Industries, which has leased its jetty at Ratnagiri to Bharat-Shell has hit upon a money-spinner. It has rented out its LPG storage facility for an annual compensation of between Rs 18 crore and Rs 20 crore. The amount has already been paid for the current year, although the facilities will be used only from September. The agreement is for a ten-year period, and should the oil company use more than the contracted capacity of 2,00,000 tonnes, it will pay more.

Finolex Industries, which has separate capacities for ethylene storage at Ratnagiri, is being courted by several oil companies, PP Chhabria said. With the de-canalisation of import of LPG, Chhabria said there was scope for similar agreements with other companies. Finolex Industries will have to handle other products, including creating more storage facilities. y

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.