KIC Metaliks chairman R. K. Kajaria (right) and vice-president N. Mahapatra in Calcutta on Tuesday. Picture by Kishor Roy Chowdhury

Calcutta, Feb. 1: The Kajaria-owned KIC Metaliks is planning to tap the capital market in the first quarter of the next financial year with a Rs 68.05-crore public issue. The proceeds from the issue will be used to part-finance the company?s Rs 108.05-crore expansion plan at its Durgapur plant.

Apart from the public issue, KIC Metaliks will make a preferential allotment of Rs 10 crore. The board of directors has already approved a preferential allotment of 700,000 shares of Rs 10 each at a price of Rs 80 apiece to the promoters and their associates. The board has also cleared a preferential allotment of shares to NRIs and OCBs at a suitable premium up to a value of $2 million, subject to necessary approvals.

According to company sources, the proposed public issue is likely to be priced at Rs 80 apiece. ?The pricing will be not be below the price at which the board has recently approved the preferential shares,? said a company official.

The company will also take a term-loan of Rs 40 crore to fund the expansion programme.

KIC Metaliks, a major producer of pig iron and castings in Bengal, has entered into an agreement with Tata Steel, under which the steel major will buy 50 per cent of the pig iron produced by the Kajaria company. The agreement is for 18 months and will be renewed thereafter. The two companies will also review the price after every quarter.

Addressing a press conference here today, KIC Metaliks chairman R. K. Kajaria said the growth plan envisages integration of the company?s mini blast furnace through backward and forward linkage projects.

The expansion programme will enable the company to achieve better margins and ensure savings through cost-efficient operations.

As part of the expansion plan, the company is setting up a 4-MW captive power plant at a cost of Rs 13.87 crore. The power plant will be based on recycled waste gases from mini blast furnaces. The annual savings on account of the captive power plant will be more than Rs 7 crore.

The company will also increase the capacity of mild steel billets to 1,50,000 tonnes per annum at a cost of Rs 34.32 crore. The expansion plan also envisages setting up of a hot stove, a coke oven plant (1,44,000 TPA) and a sponge iron plant with a capacity of 1,00,000 tonnes per annum.