Mithun Roy

Mumbai: Adhunik Metaliks, the flagship company of Kolkatabased Rs 1,500 crore Adhunik Group, is initiating favourable steps amid rising ore prices.

It has started iron ore production from its acquired Orissa Manganese & Minerals (OMM) since last month. The company is targeting around 1 million tonne of ore in the next two years.

Sources say the company will dilute 10% stake in the fully-owned subsidiary OMM to private equity (PE) players.

For the last few months, it is in talks with PE players, which include Singapore and US based firms. The deal will be concluded by next month.

Alok Kumar Sharda, chief financial officer, Adhunik Metaliks told DNA Money, “We have started ore production from OMM and set a target of 1 million tonne by 2010.”

On equity dilution to PE players, he declined to comment, but said, “The company will inform to the stock exchanges if things are finalised and approved by the Board.”

OMM has iron ore reserves of 64 million tonne and manganese ore reserves of 36 million tonne. OMM has six manganese ore mines and one iron ore mine.

Analysts Prasad Baji and Vinay Chokhra of Edelweiss Securities said in its research report that the company is well placed to reap the benefit of the increasing iron ore and manganese ore prices. It expects real ramp up of production in iron ore and manganese ore in H2FY09E and then further in FY10E.

Expansion plans include raising the sponge iron capacity from 150,000 tonnes to 315,000 tonnes, setting up a captive power plant of 17 mw.

The investment will be Rs 422 crore, of which debt will account for Rs 274 crore.

The company may bag orders for alloy steel from railways, defence on the commissioning of its rolling mill and ferro alloy unit. It recently completed the second phase of its steel plant, raising capacity to 430,000 tpy from 250,000 tpy.

Source : DNA