Kalyani Gerdau

completed

KGS is a joint venture between Gerdau S.A., (“Gerdau” or the “Sponsor”), the Brazilian steel major, and Kalyani Steels (of the Bharat Forge group) from India. The Company’s manufacturing unit is located at village Jambulapadu, about 6 km from Tadipatri town in Ananthpur district of Andhra Pradesh on 887 acres of land. The existing facilities have a production capacity of approx. 300,000 tonnes per annum (TPA) of pig iron and billets using the blast furnace route. Before acquiring by the current sponsors, the Company was operating as SJK Steels since 1995, with actual production starting only in 2005. The proposed project involves setting up of a 6 MWe blast furnace waste gas recovery based steam and power generation plant, a sintering plant to better utilize the iron ore fines; vacuum degasser unit, a rolling mill to manufacture value-added long products such as TMT (Thermo Mechanically Treated) rebar and SBQ (Special Bar Quality) bars and financing of the Company’s long-term working capital needs (“Project”). Production will not start until the completion of this ongoing efficiency improvement project. In addition, Company is planning to set up a coke oven with additional waste gas recovery based power plant (9MWe) and to enhance blast furnace efficiency through adoption of PCI technology. In future (2-3 years) KGS has plans for manufacturing capacity expansion to 1 million tons per annum (MTPA) with a new production line including blast furnace, additional capacity of coke oven with waste gas recovery based power plant (approx. 40MW)basic oxygen furnace, sinter line and additional casting and rolling capacity. A township for its employees and families is also proposed to be established. These elements are currently out of the scope of IFC investment, although related social and environmental issues were considered in the review.