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| Falcon Tyres to raise Rs 300 cr; board decides to split stock |
| BS Reporter / Bangalore Jul 30, 2009, 17:38 IST |
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Falcon Tyres Ltd is raising Rs 300 crore to carry out expansion of its tyre manufacturing capacity at Mysore plant this year. The company plans to raise Rs 200 crore debt and another Rs 100 crore by divesting a percentage of stake to a private equity firm.
Announcing this at a press conference, here today, Pawan Kumar Ruia, Chairman, Ruia Group, which owns Falcon Tyres, said, “We are expanding our capacity at Mysore plant from the existing 7.5 lakh tyres per annum to 1.4 million tyres per annum by March next year and to fund this we are raising Rs 300 crore by way of debt and equity. We have already got a loan of Rs 100 crore sanctioned by Central Bank and we are yet to initiate talks with any PE fund for the remaining Rs 100 crore. Another Rs 100 crore will be raised through the debt.”
The company, currently has a debt of Rs 120 crore, of which Rs 78 crore is term loan. The board of directors of Falcon Tyres, which met here today also decided to split the shares of Rs 10 into two shares of Rs 5 each. The board also decided to issue bonus shares in the ratio of two shares for one share held. The company’s annual general meeting is convened in September this year to take the shareholders’ approval for the same, he said.
The company, currently has an outstanding shares of 56,80,000 shares.
“We are getting huge demand for our tyres from both the Original Equipment Makers (OEMs) and export markets. We are unable to meet the demand from our current capacities, so we have planned to increase the capacity at Mysore plant to 1.4 million tyres. Once the expansion is completed, one third of the capacity each will be sold to OEMs, replacement market and export markets,” Ruia said.
He said the company is also looking at outsourcing opportunities to meet the demand and supply gap. It is currently in talks with local tyre manufacturers for supply of around 500,000 tyres, he said.
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