Sterlite to review rights issue plan

Sterlite Industries is reviewing the modalities of its proposed rights issue. The company had planned to raise at least Rs 1,400 crore through the rights issue, in the ratio of three new shares for every 10 existing shares.

The company is likely to reconsider the ratio of the rights issue, thereby resulting in a possible alteration of the funds to be raised.

Sterlite Industries, informed the Bombay Stock Exchange that the company's board will meet on May 31, to review and finalise the terms of the proposed rights issue of equity shares of the company.

Sources close to the development told Business Standard, "The company is reviewing the proposed rights issue on the back of changing market scenario and there is a possibility of a revision in the ratio and price of the issue."

The Sterlite scrip closed at Rs 441.20 at the BSE on Friday.

Sterlite had planned the rights issue to fund its expansion projects in group companies Bharat Aluminium Company (Balco) and Hindustan Zinc.

According to the proposed rights issue, Sterlite's existing equity base of Rs 17.9 crore consisting of Rs 3.59 crore paid-up equity shares of a face value of Rs 5 is expected to swell to close to Rs 47 crore, with around Rs 9.33 crore paid-up equity shares.

Sterlite has slated a total investment of around $2 billion over 3 years in 4 expansion projects. The company will be investing $800 million for the expansion at Balco to take the installed capacity to 3.5 lakh tonne per annum and $800 million for setting up an alumina refinery in Orissa with a capacity of 1.4 million tonne per annum.

Out of the proceeds of the Vedanta IPO about $225 million will be utilised for Balco and $400 for the alumina refinery at Orissa. Sterlite has also lined up $465 million for capacity expansion at HZL and about $100 million for its copper smelter.

HZL had raised about $125 million though the external commercial borrowings route for funding its capacity expansion.