Agarwal: Reaching out

Calcutta, June 2: Adhunik Metaliks Ltd has decided to take its wholly owned subsidiary Orissa Manganese and Minerals public.

Cashing in on the huge surge in international iron ore prices, the company hopes to realise a Rs 1,600-1,700 crore valuation for the subsidiary, which is sitting on 80 million tonnes (mt) of iron ore and 50 mt of manganese reserve.

The initial public offer (IPO), to be launched in the next four-six months, is expected to unlock value for Orissa Manganese and Adhunik. The promoters are looking to mop up Rs 200-250 crore from the share sale.

Orissa Manganese has begun the mining of manganese recently, while iron ore production is expected to begin later this year. As a pure mining company, its peers are NMDC and Sesa Goa.

Adhunik had bought Orissa Manganese for Rs 60 crore sometime back. Iron ore prices have gone through the roof after the acquisition.

The Calcutta-based company was initially planning to induct a private equity player as a shareholder of Orissa Manganese. But that did not materialise, resulting in the plan for the IPO.

The decision for the share sale is coming at a time when Adhunik struggled to post growth in profit on a par with its sales. The company posted Rs 80.4 crore profit in 2007-8 compared with Rs 77.4 crore in the year before, up a meagre 3 per cent. Net sales, however, increased to Rs 1004.5 crore compared with Rs 735.7 crore the year before, representing 36 per cent growth.

The board, which met today to approve the result and the Orissa Manganese public offer, also recommended a 12 per cent dividend.

Manoj Agarwal, managing director of Adhunik, said the lower profit was because of high interest costs and depreciation arising out of the new facilities.