SICAL to hive off non-logistics biz

To raise Rs 500 cr in Indian market & $50 million overseas

SICAL Ltd, an integrated logistics services company for bulk commodities, plans to focus only on its bulk logistics and hive off its non-logistics business activities.

The company will also raise up to Rs 500 crore in the Indian market and up to $ 50 million (around Rs 230 crore) in the overseas market through debt and equity offerings for the expansion plans of SICAL Logistics Division, and also to restructure its existing debt/loans.

A company release said that the board of directors in their meeting on November 15 had given the nod for hiving off the company's non-core business, raising funds for expansion and also for doubling the company's authorised capital to Rs 200 crore from the present Rs 100 crore.

The non-core business, that includes building materials, refractories, flexible shaft and drums, oil palm, speciality chemicals, plantations, vehicle sales and spares and civil construction and property development, among others, will be transferred to one or more companies formed specifically for the purpose.

Those non-logistics business divisions were merged with SICAL in 1995 since, at that time, the company felt a diversification strategy as a better business option.

However, the company has said that "given the good performance of SICAL's core business of logistics and the bright prospects for bulk commodity logistics in India, a focus on logistics would be vital for better value creation at the organisational and operational levels and enhance shareholder value."

SICAL plans to mobilise funds for expansion relating to new projects in its logistics division that include the new Rs 500 crore iron ore handling terminal project, capital expenditure, working capital and to restructure its current debt portfolio.

It will raise up to Rs 500 crore through one or more public or private offerings in the domestic markets and up to $50 million through global depository receipts/external commercial borrowings/foreign currency convertible bonds/American depository shares, among others in the oversees markets.

The board has also proposed to increase the company's authorised share capital, currently Rs one billion "� consisting of 45 million equity shares of Rs 10 each and 55 million preference shares of Rs 10 each "� to Rs two billion, consisting of 50 million equity shares of Rs 10 each and 150 million shares of Rs 10 each.

SICAL's hive off road map will be implemented by a Business Restructuring Committee, consisting of Dhananjay N Mungale, formerly with DSP Merril Lynch, former director of Aurobindo Pharma, M Ajayakumar, who has been inducted as a strategic advisor and additional director at SICAL, and S Vasudevan, managing director of SICAL. The members of this committee would also form the Capital Issues and Allotment Committee to implement the company's fund raising effort.

The company, which reported a consolidated revenue of Rs 1,212 crore for 2004-05 (logistics contributed Rs 884 crore), will seek shareholders' approval by postal ballot followed by an extraordinary general meeting.