Mumbai, Aug. 20: Barak Valley Cements Ltd, based in the Northeast, will be the first company from the region to enter the capital market. It will float its initial public offering (IPO) next month to raise about Rs 40 crore. The proceeds will be used to fund the company’s expansion.

“We expect to raise Rs 35-40 crore through the IPO. We are happy to become the first company from the Northeast to be listed on the bourses,” Bijay Garodia, chairman of Barak Valley Cements, told The Telegraph.

The company, which started commercial production in April 2001, makes cement of different grades and markets its products under the Valley Strong Cement brand.

The Assam-based company’s operations are concentrated in the northeastern region. The manufacturing unit at Badarpurghat in Assam produces both ordinary portland cement and portland pozzolana cement.

The company has three wholly owned subsidiaries — Badarpur Energy Private Ltd, Cement International Ltd, and Meghalaya Minerals & Mines Ltd.

The company is setting up a 6mw captive power plant for Badarpur Energy, which will be commissioned within the next three months. The company said it would invest about Rs 24 crore in the plant. “We will use a part of the IPO proceeds to fund the construction of this plant. We also plan to increase our cement production capacity to 2 lakh tonnes from 1.5 lakh tonnes. This will also be funded through the IPO,” Kamakhya Chamaria, managing director of Barak Valley Cements, said.

The company will dilute about 25 per cent of its equity through the IPO. This comprises 5,660,000 shares. The company is yet to decide the face value and the premium on the shares. It has filed the draft red herring prospectus and is awaiting the Securities and Exchange Board of India’s approval.

Barak Valley Cements had posted a turnover of Rs 75 crore in 2006-07, with an operating margin of 20 per cent. “We expect a turnover of Rs 100 crore next year, with an estimated profit of about Rs 25 crore. We enjoy a margin of Rs 1,000 per tonne, which is higher than almost every other cement company in India,” company officials said.