Calcutta, Sept. 15: Electrosteel Castings — the city-based ductile iron pipe maker — plans to tap the QIP (qualified institutional placement) route to raise up to Rs 600 crore through a mix of debt and equity.

Besides a plain equity offering of Rs 100-150 crore, the company intends to issue non-convertible debentures (NCDs) and convertible warrants. The NCD issue size is likely to be Rs 200 crore with a tenure of three years.

The warrants, convertible into equity shares in 3-5 years, amount to Rs 200 crore.

The composite offer will help the promoters avert a large dilution of equity.

Based on the present market price of around Rs 42 a share, the promoters’ holding will not be reduced by more than 3-5 per cent.

The Kejriwal family — promoters of ECL — owns around 45.57 per cent in the company.

The issue of securities is meant to augment the long- term resources, including working capital requirement, and to develop iron-ore mines, coking and non-coking coal mines.

Part of the proceeds will also be used to build a war chest for future opportunities.

However, ECL will not be able to raise the entire money now as warrant holders pay only a fraction of the contracted sum.

The company has appointed Edelweiss Capital Ltd as the merchant banker. It will now seek shareholders’ approval through a postal ballot.

Though the ECL board had cancelled the warrants issue earlier, it had approved the QIP issue.

The company had allotted 87,00,000 warrants convertible at Rs 68 per share to a foreign entity on March 11, 2008.

According to the Sebi (disclosure and investor protection) guidelines, it had also received Rs 5.91 crore representing 10 per cent of the total consideration towards the allotment of the warrants.

The warrants were convertible within 18 months from the date of allotment, and the last date of conversion was September 11, 2009. However, the applicant did not opt for the conversion as the ruling market price was at a 38 per cent discount to the conversion price. As a consequence, the entire amount received has been forfeited and the warrants cancelled.