Icl Plans Rights Issue To Raise Rs 150 Cr
India Cements (ICL) plans to raise Rs 150 crore through a rights issue and private placement of equity to replace high-cost debt taken for the acquisition of Visakha Industries and the Yerrraguntla cement plant of Cement Corporation of India.
The company board met in Chennai yesterday to finalise details.
Top sources say the company had a debt equity ratio of 1.1 with borrowings at Rs 538.12 crore by March 31, 1997.
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During the announcement of the first half results of 1997-98, ICL had announced it had raised a further debt of Rs 400 crore for these two acquisitions thereby taking the total borrowings to over Rs 900 crore. Of this, Rs 300 crore was through term loans, while the rest came from a private placement of non-convertible debentures.
However, during this period, the company had also announced that these two acquisitions, as well as all the projects on hand, will be funded through borrowings and internal generation.
India Cements planned to have a capacity of five million tonnes by the beginning of the year. It reached this target after taking over the two companies. But now the target has been pushed upto 10 million tonnes to be achieved mainly through takeovers.
Market sources say the company would have been in a comfortable position with a debt-equity ratio of less than two, if it had not attempted to takeover Raasi Cements. Though it did not succeed, sources say ICL may have spent another Rs 7-8 crore in hiking its stake in the company further.
Now with additional funds flowing, analysts say the company may even go in for an open offer to take a controlling stake. With this equity dilution, India Cements will have a higher leverage facility and may borrow more for takeovers.
There are a number of cement plants in the south which are struggling due to the industry downturn. The company is believed to be eyeing Dharani Cements and some sick units in Andhra Pradesh.