The P K Mittal-controlled Ispat Industries is looking at a 110-mw captive power project at Dolvi in Maharashtra at an estimated Rs 350 crore (Rs 3.5 billion).

Company sources said: "There are two 55 mw plants coming up at Dolvi to support the increased rolling capacity. We are tying up around Rs 240 crore (Rs 2.4 billion) with local lenders, while the rest will come through internal accruals." The loans are project term loans being raised at market rate, they added.

Ispat's hot-rolled capacity is being augmented to around 3.5 million tonne per annum. The company has set a deadline of March 31, 2005, for commissioning the new capacity, which will have a rated capacity of 3 million tonne and is expected to touch 3.5 million tonne through de-bottlenecking.

Ispat had outlined an investment of around Rs 840 crore (Rs 8.4 billion) for the expansion, which included enhancing capacity from 1.5 million tonne to 3.5 million tonne.

Ispat currently draws power from the Maharashtra State Electricity Board grid. The new power plants will reduce the consumption from the MSEB grid and as the capacity increase takes place, the captive power plants will be used.

The two power plants are co-generation plants, based on the gas from the blast furnace and furnace oil. The company plans to commission these plants by the end of the next financial year.

Ispat has an outstanding debt of around Rs 6,800 crore (Rs 68 billion), while its equity, reserves and advances are around Rs 2,222 crore (Rs 22.22 billion).