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Kesoram board okays fund raising up to Rs 2,000 cr to replace existing debt

The funds could be raised by way of equity, or debt including NCDs, preference shares and also rights issue or preferential allotment or a combination

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Kesoram Industries | fund raising | NCDs

Ishita Ayan Dutt  |  Kolkata 

capex, expenditure, defence, funding, cash, capital, budget, crunch, liquidity, money
The company has not complied with certain financial debt covenants and has defaulted in repayment of letters of credit

The board on Thursday approved a plan of up to Rs 2,000 crore to primarily replace existing debt.

The company informed the stock exchanges that the board had empowered the "Committee" to decide and formulate details of

The funds could be raised by way of equity, or debt instruments including non-convertible debentures, preference shares and also rights issue or preferential allotment or a combination.

P Radhakrishnan, whole-time director and chief financial officer, Kesoram, said this was an enabling resolution and the funds would be used predominantly to replace debt.

As on March 31, 2020, Kesoram's net current liabilities were Rs 1,156.20 crore at a standalone level and Rs 1,250.50 crore at a consolidated level, respectively.

Further, the company has not complied with certain financial debt covenants and has defaulted in repayment of letters of credit, its working capital facilities and interest payable to lenders aggregating to Rs 272.77 crore in respect of term loans and working capital facilities as on March 31, 2020, the notes to accounts said.

The default is primarily caused due to liqudity mismatch, while the company has continued to genetrate positive cash flow from its business operations, it read.

Kesoram is also working towards a resolution plan with the lenders and has signed a non-binding term sheet with a potential investor, which will enable it to scale up its operations and meet the remaining financial obligations.

Radhakrishnan said that the investor was a financial investor. "The idea is to focus on operations and solve liquidity issues," he said.

The company posted a pre-tax loss of Rs 15.95 crore in the June quarter at a consolidated level compared to a pre-tax profit of Rs 46.67 crore. Revenue from operations were at Rs 427.29 crore compared to Rs 800.84 crore in the same period last year.

Operations were impacted due to shutdown of all plants and offices following the nationwide lockdown and were resumed in a phased manner.

On a standalone basis, Kesoram however, recorded a pre-tax profit of 18.10 as against Rs 64.64 in the same period last year while revenues were at Rs 409.03 crore compared to Rs 718.10 crore.

First Published: Thu, July 30 2020. 19:47 IST
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