Emami to raise up to Rs 2,000 cr

Meanwhile, Emami today cleared the deck for acquisitions worth up to Rs 5,000 crore. In a filing to the Bombay Stock Exchange, the company said its board had approved plans to raise long-term resources up to Rs 2,000 crore through the issue of securities.

The board also gave its nod to increase the present borrowing limit to Rs 3,000 crore from Rs 1,500 crore. The company’s market capitalisation exceeded the Rs 5,000-crore mark earlier this year, according to its latest annual report, and turnover crossed the Rs 1,000-crore mark in 2009-10.

The board’s green signal acquires significance, as Emami is on the lookout for potential mergers and acquisitions. Aditya Agarwal, a wholetime director at Emami, confirmed it. “If something happens, funds can be made available at the earliest. Otherwise, we have to send out notices, call a meeting, and then go about it, which takes times.”

At the company’s annual general meeting in August, Joint Chairman R S Agarwal had said Emami was exploring acquisitions, both domestic and overseas, worth about Rs 2,500 crore, in the personal and healthcare consumer products segments.

“We have been looking at a domestic firm for the last month and a half, and Ernst & Young has been given the mandate. It could be a company that has more than one brand, but it is a big company with big potential,” Agarwal had said, adding that a domestic purchase, worth between Rs 800-1,000 crore, and international buys worth up to Rs 1,500 crore, were being looked into.

The Middle East, South Asia, Africa and the CIS (Commonwealth of Independent States) area are understood to be on Emami’s radar for overseas buys.

Emami has been intermittently linked to the race for Ahmedabad-based Paras Pharmaceuticals, which has been put on the block after two private equity firms, with a majority stake in the company, showed intention to pull out.

Last month, top company officials told Business Standard that Paras Pharmaceuticals was “important” for Emami, although multinational players had been billed as the front runners in the ongoing race.

“Many things are happening, but nothing has been firmed up yet. But we are still looking at Paras,” Aditya Agarwal said.

Emami’s last acquisition was in 2008 when it acquired Mumbai-based Zandu for about Rs 750 crore.