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Fund shopping back in fashion

Mumbai, Sept. 13: Less than two days after tying up a three-way merger of group companies, Kumar Birla propelled his non-ferrous metals firm Hindalco into a scrum of companies that are scrambling to raise cash this year.

With the economy in a robust shape, markets in fine fettle and easy money available, more and more companies are raising cash through convertible bonds and rights issues. On Tuesday, Hindalco Industries and three others ' Ceat Ltd, Deccan Chronicle Holdings Ltd and Dagger Frost Tools Ltd ' unveiled fund-raising plans to finance their expansion plans.

On Sunday, Birla had announced a mega merger of Indian Rayon, Indo Gulf Fertilisers and Birla Global Finance to create a new giant called Aditya Birla Nuvo that will cover businesses from textiles to insurance.

Now, it is Hindalco’s turn to see some action. Birla has never made any secret of his intentions to turn the company into a global non-ferrous metal powerhouse with cost efficiency playing a crucial role.

Hindalco, which wants to emerge as a global giant in copper and aluminium, is now tying up for funds for its expansion into more value-added products. The company today announced that its board will meet on September 20 to consider a rights issue.

A company spokesperson refused to spell out details of the rights issue. Sources said it comes in the wake of brownfield expansions in both copper and aluminium.

In July, Hindalco's brownfield expansion in copper was commissioned to raise the smelter capacity to 5 lakh tonnes from 2.50 lakh tonnes. When it is fully operational, it is expected to position Birla Copper as the world’s largest single location custom smelter.

Birla told shareholders at the annual general meeting in July that the company intended to raise alumina capacity at the Muri plant to 4.50 lakh tonnes from 1.10 lakh tonnes and this is likely to be commissioned by the third quarter of this year.

The proposal to raise capacity at the Belgaum plant to 6.50 lakh tonnes is also under evaluation. Hindalco is also raising high-value special alumina capacity from the existing level of 91,000 tonnes. Its Hirakud smelter metal capacity is being enhanced to 1.46 lakh tonnes.

Hindalco has also entered into MoUs with the Orissa and Jharkhand governments to set up an aluminium complex and aluminum smelter respectively. Once commissioned, these projects will position the company in the league of the top 10 global players.

Simultaneously, Hindalco is also looking at acquiring new mines apart from evaluating opportunities for more value-added growth.

Hindalco’s move to go in for a rights issue comes after its board had earlier decided to sub-divide the equity from one share with a face value of Rs 10 into 10 with the face value of Re 1 each. The move was designed to ensure active retail participation.

Ceat Ltd, the RPG group company, is also considering a rights issue. The board of the tyre major will meet on September 23 to consider a rights issue.

Media companies are also on a cash-raising spree and the market has been eager for more. Deccan Chronicle, which had concluded a successful IPO last December, today launched a $54.02-million foreign currency convertible bonds (FCCB) offering. The bonds are likely to be listed on the Singapore stock exchange.

Elsewhere, Dagger Frost Tools Ltd, a part of the Yash Birla group, filed a composite draft offer document with the Securities and Exchange Board of India (Sebi) to access the capital market with a rights-cum-public issue aggregating Rs 29 crore.

The company is planning to issue shares in the price band of Rs 65 to Rs 78 apiece, aggregating to Rs 18.03 crore.

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