Lloyds Metals Approves DRI Capacity Expansion to Over 9 Lakh MTPA; Plans ₹1,550 Crore NCD Issue
Lloyds Metals and Energy Limited (BSE: 512455; NSE: LLOYDSME) has approved a significant expansion of its Direct Reduced Iron (DRI) manufacturing capacity at its Ghugus and Konsari plants in Maharashtra.
The company plans to increase the combined capacity of the two DRI plants to more than 9 lakh tonnes per annum (MTPA) through debottlenecking, process optimisation and technology improvements.
The Board also approved two separate Non-Convertible Debenture (NCD) issues of up to ₹600 crore and ₹950 crore, aggregating to ₹1,550 crore, through private placement, subject to applicable approvals.
DRI Capacity to Cross 9 Lakh MTPA
Lloyds Metals currently operates DRI facilities at Ghugus and Konsari.
Under the approved expansion:
- Ghugus DRI capacity: 6.30 lakh MTPA → 8.15 lakh MTPA
- Konsari DRI capacity: 70,000 MTPA → 92,400 MTPA
- Combined capacity: 7 lakh MTPA → 9.074 lakh MTPA
The proposed expansion represents a combined capacity addition of approximately 2.074 lakh tonnes per year.
The company expects the capacity enhancement to be completed within one year.
₹190 Crore Investment Through Internal Accruals
Lloyds Metals said the capacity expansion will require a total investment of ₹190 crore.
The planned investment is split between the two facilities:
- Ghugus: ₹140 crore
- Konsari: ₹50 crore
The company plans to finance the expansion entirely through internal accruals.
This means the DRI capacity expansion itself is not planned to be funded through fresh borrowing, according to the company’s disclosure.
Expansion Through Debottlenecking
The company said the additional capacity will be achieved through debottlenecking measures and optimisation of process and technological parameters.
The objective is to improve the operational efficiency and utilisation of existing kiln facilities.
This approach allows the company to increase production capacity using its existing manufacturing infrastructure rather than relying solely on construction of entirely new plants.
Why DRI Capacity Matters
Direct Reduced Iron is an important intermediate product in the steel-making value chain.
Lloyds Metals said the expansion is aligned with its strategy of strengthening its position across the complete steel-making value chain.
The company also expects the higher capacity to support better utilisation of available iron ore reserves and increase value addition through forward integration with its existing sponge-iron facilities.
The company has stated that the expansion is expected to support sustained development and potentially contribute to improved margins and profitability.
Actual financial benefits, however, will depend on production levels, realisations, costs, utilisation and steel-market conditions.
₹1,550 Crore NCD Issue Approved
Alongside the operating-capacity expansion, the Board approved the issuance of two separate NCDs through private placement.
The proposed issues are:
- ₹600 crore NCD
- ₹950 crore NCD
- Total: ₹1,550 crore
The issuance remains subject to applicable regulatory and statutory approvals.
The company said the proposed issuance falls within the overall limits previously approved by its Board and an existing in-principle approval.
The NCD issue is separate from the ₹190 crore DRI expansion investment, which is planned to be financed through internal accruals.
Why the NCD Plan Matters
The proposed ₹1,550 crore debt issuance is an important item for investors to monitor because it could affect the company’s financing structure and future interest costs.
The ultimate impact will depend on:
- Coupon rates
- Maturity periods
- Utilisation of funds
- Overall borrowing levels
- Cash-flow generation
- Future capital expenditure requirements
The company’s disclosure does not indicate that the ₹1,550 crore NCD issue is being used specifically to finance the announced DRI capacity expansion.
Employee Stock Option Shares Also Allotted
The Board also approved the allotment of 1,41,969 equity shares under the Lloyds Metals and Energy Employee Stock Option Plan – 2017.
The shares were allotted to the Lloyds Employees Welfare Trust at an exercise price of ₹4 per share, including a ₹3 premium.
Following the allotment, the company’s issued and paid-up equity share capital increased to:
₹56.30 crore, comprising 56,30,48,920 equity shares with a face value of ₹1 each.
The newly allotted shares will rank pari passu with the company’s existing equity shares.
What Investors Should Watch
1. DRI Capacity Ramp-Up
The most important operational monitorable will be the completion of the capacity expansion within the stated one-year period and the subsequent production ramp-up.
2. Production and Capacity Utilisation
Investors should track whether the additional 2.074 lakh MTPA capacity translates into higher production and sales volumes.
3. ₹190 Crore Capex Execution
The expansion requires ₹190 crore of internal accruals. Actual spending and project completion will be important to monitor.
4. Steel and DRI Realisations
Higher capacity does not automatically translate into higher profitability. DRI prices, steel demand, raw-material costs and operating margins will remain important factors.
5. ₹1,550 Crore NCD Issue
Investors should watch the terms of the proposed NCDs, including interest costs, maturity and the eventual use of funds.
6. Vertical Integration
The company’s stated strategy of using available iron ore resources and strengthening its steel-making value chain will be another important area to track as capacity expands.
Key Takeaway
Lloyds Metals has approved a ₹190 crore DRI capacity expansion that will take the combined capacity of its Ghugus and Konsari plants from approximately 7 lakh MTPA to more than 9 lakh MTPA.
The expansion is expected to be completed within one year and will be funded through internal accruals.
At the same Board meeting, the company also approved potential ₹1,550 crore of NCD issuance through private placement.
For investors, the key distinction is that the ₹190 crore capacity expansion is an operating-growth initiative, while the NCD proposal is a financing decision. The next important indicators will be capacity commissioning, production growth, margins, cash flows and the terms and utilisation of the proposed debt issuance.
Source: Lloyds Metals and Energy Limited Board meeting outcome dated September 21, 2026.
Disclaimer: This article is for informational and educational purposes only and should not be considered investment advice or a recommendation to buy or sell any security. Investors should conduct their own research and consider their risk profile before making investment decisions.
