Adhunik to consolidate six group firms

The Kolkata-based Adhunik group, engaged in value-added steel products, is consolidating its six companies into four.

After the process is completed by March this year, the group will be headed by Adhunik Metaliks, producing auto-grade and stainless steel.

The other three will be Adhunik Corporation, which will produce TMT bars and wire rods, Adhunik Alloys, which makes sponge iron, and Adhunik Steels, which will handles the service business of the group and for which its has linked up with Tata Steel for 15 years.

As part of the overall plan, Adhunik Metaliks is in the middle of a Rs 750 crore expansion, which will increase its capacity to half a million tonne per annum in its Rourkela plant by the end of next fiscal.

"Our expansion will be one of the most effective as power costs will be half of our peers. Moreover, with a 30-year lease of coal mines from the Orissa government we are assured of a 38 million tonne reserve," said Manoj Agarwal, managing director. The company has already invested Rs 250 crore and the capacity has increased to 2.6 lakh tonne per annum.

The company has signed memorandum of understanding with about 20 original equipment manufacturers to supply auto-grade steel.

It is also in advanced stage of signing long-terms supply contracts with auto majors including Tata Motors, Bharat Forge, Maruti Suzuki and Ford.

To finance the expansion, Adhunik will raise Rs 284 crore through debt and Rs 53 crore through internal accurals. The company will also launch a Rs 100 crore initial public offer within two months.

The Rs 600 crore company is on a due diligence mode for acquiring about five mines in Queensland, Australia and will form a joint venture with a local company.

"We will acquire about 10 per cent stake and the process shouldn't take more than three months," added Agarwal.