Jayshree Chemicals rights issue to fund Rs 150 cr modernisation plan

Jayshree Chemicals Limited, a S K Bangur group company, is making a rights issue of 2,39,94,374 equity shares of Rs 10 each for cash at a premium of Rs 5 per equity share aggregating to Rs 35.99 crore. 

The rights issue is being made to the equity shareholders of the company in the ratio of 9 equity shares for every 2 equity shares held. The rights issue has already opened and closes on Thursday 18th March, 2010. The issue is being made to part finance the company’s modernisation-cum-expansion plan located at Jayshree in Ganjam district of Orissa at a capital outlay of Rs 150 crore. 

The Rs 150 crore capital outlay envisages introduction of state-of-the-art Membrane Cell Technology by replacing the existing Mercury Cell Technology and raise production capacity of caustic soda from 65 tonnes per day to 152 tonnes per day. The Company has entered into a MOU with M/s Uhde India Private Ltd, a wholly owned subsidiary of Uhde, Gmbh, Germany, a Thyssenkrupp Group Company for providing the entire engineering services, supply of membrane cell elements, total implementation and commissioning of the membrane based cell technology. 

Work on the expansion-cum-modernisation programme has already commenced and presently construction activities at the factory site are in full swing. Orders for almost all the equipments have been placed and as per present plans, the project is likely to be commissioned within the schedule. 

Jayshree Chemicals is the only caustic soda manufacturer in Orissa where major caustic soda consumers like Nalco, Hindalco and Vedanta Aluminium are located. As a result, the company enjoys the benefit of lower freight in its supplies to these manufacturing units. 

Apart from the rights issue of Rs 35.99 crore, the funding for the expansion-cum-modernisation plan will be made by a debt component of Rs 90 crore and balance by internal accruals and excise credit available to the company. The entire debt has already been sanctioned by a consortium of bank led by State Bank of India and disbursement has already commenced. 

Commenting on the expansion plan, Virendra Bangur, Director said ‘on implementation of this project, the company will have higher margins on account of economies of scale and savings in input costs’.