Electrosteel arm plans Rs 350 crore maiden float

Electrosteel Integrated Ltd, a subsidiary of Kolkata-based Electrosteel Castings Ltd, is planning to raise Rs 350 crore via initial public offer (IPO) to fund its plan to set up a steel plant. Sources close to the development told DNA, “The company is currently in the process of finalising details and will file the draft red herring prospectus (DRHP) by January end."When contacted, Ashutosh Agarwal, CFO, Electrosteel Castings, denied to comment. Electrosteel Integrated is planning to set up a 2.2 million tonne per annum (mtpa) integrated plant to produce 1.2 mtpa long product of steel, 0.27 mtpa billet, 0.4 mtpa pig iron and 0.33 mtpa ductile iron pipe. The plant would be located in Bokaro, Jharkhand. The raw material linkages for the plant are already in place as the company has been allotted a captive coking coal mine in Jharia near Bokaro. It will source iron ore from Kodolibad mine, Jharkhand.According to sources, out of the total Rs 7,500 crore required for the steel plant, the company plans to raise Rs 5,500 crore via debt route and the rest Rs 2,000 crore will be put in by the promoters. Out of this Rs 2,000 crore, the promoters are looking to raise Rs 350 crore through the IPO. Electrosteel Castings, the parent company, has a free-float market capitalisation of around Rs 700 crore with the promoter holding of 48.08% as on September 2009. The company reported a net profit of Rs 63 crore for the quarter ended September 30, 2009.