Bangalore, Aug 17: Hutti Gold Mines Co Ltd (HGML) has scaled down the cost of its proposed expansion project from Rs 138.55 crore to Rs 100 crore.

The move to cut project cost follows the sluggish capital market conditions. The decision is likely to hit HGML's growth plans as its fund inflow for the project will now be lower by Rs 38.55 crore. Company sources, however, do not foresee any major setback on that account.

This may also adversely affect the company's future plans at a time when it is aiming to enter the capital market with a Rs 28-crore bond issue and a Rs 10 crore preference share issue. Last Saturday HGML had announced its plan to tap the capital market early next month. Company sources said the board of directors will review the implementation of revised project and fund position. Earlier, HGML had scaled up the estimated cost from Rs 51 crore to the existing level owing to cost escalation.

Senior technical officer of HGML BR Naga Bhushan said that the company has entrusted SBI Caps as the fund managers for the forthcoming issue. However, the company has not yet received nod from the state government for the purpose.

According to industry sources, the decision comes in the wake of the state government's intervention to curtail cost of the project. Revision of the cost, according to him, would not affect the smooth completion of the project on time. ``We have already finished some project work. This would help the company to complete the expansion programme by October, 1998,'' says Bhushan. As per the expansion programme, the company will increase its existing mining capacity from 910 tpd to 3,000 tpd. This will help the company to enhance gold production from the existing 1.2 tonne to 3 tonne per annum.

The company has already completed the conversion of the copper unit at Kalyadi into a gold unit. ``As part of the project, we have taken up the plant at Kalyadi for conversion to treat gold ore in the last year and it is likely to start production during the current fiscal,'' he said.

Though the company had earlier received consent of the state government to raise Rs 30 crore through a public issue of 50 lakh shares at a premium of Rs 50, HGML shelved its plan to raise funds through this route for the time being.

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