Calcutta, Nov. 7: Adhunik Metaliks Ltd, a city-based steelmaker, is contemplating to tap the capital market with an initial public offering of equity shares in February next year to raise Rs 100 crore.

The money so raised will be used for part financing its Rs 437-crore expansion plan that envisages increasing the installed production capacity to 430,000 tonnes from 260,000 tonnes at present.

The public issue will bring down the shareholding of the promoters ? the Agarwal family ? to 75 per cent in the company.

Elaborating on the company’s projects in the pipeline, Manoj Kumar Agarwal, managing director of Adhunik Metaliks, said it would set up a power plant and invest in developing coal and iron ore mines.

“We are trying to come out of the commodity business by foraying into alloy and stainless steel,” Agarwal said.

The company will make 220,000 tonnes of special alloy and stainless steel, which will be catered to the automobile and engineering sectors. It will also produce 100,000 tonnes of seamless rounds and an equal quantity of special alloy billets.

The work on the new projects will start from January next year and will be completed in another 14 months.

While the IPO will generate Rs 100 crore, the company will borrow Rs 284 crore from banks and financial institutions and the remaining Rs 53 crore of the total project cost will be mobilised through internal accruals.

The expansion will, however, push up the company’s debt-equity ratio to 1.59:1 from 1.25:1 at present.

The Adhunik group has obtained a provisional allotment of coal block at Talcher in Orissa from the coal ministry and is likely to get allotment of iron ore mines in both Jharkhand and Orissa soon. Coal production from the Talcher mine is expected to begin from next year, while iron ore mining shall start a year later.

Agarwal said the iron mines have high quality deposits having 67 per cent of ferrous content.

Going forward, Adhunik Metaliks wants to gain control on its raw material costs and thus bring the cost of production down.

Adhunik Metaliks has a turnover of Rs 150 crore, while the group’s income stands at Rs 550 crore.

There are about seven companies in the group and Adhunik Metaliks has its manufacturing facility in Rourkela.

Agarwal said only three companies ? Adhunik Metaliks, Adhunik Corporation and Adhunik Steel ? would exist in the group following a restructuring exercise.

Adhunik Corporation and Adhunik Steel would deal in manufacturing of TMT bars and servicing, respectively.