The board of Kesoram Industries has approved a Rs 200-crore rights issue as part of a plan to raise Rs 600-crore equity in phases as the company looks to reduce its debt burden.
Kesoram, which declared a net profit of Rs 167 crore in 2020-21 compared with a loss of Rs 485 crore a year before, has a debt burden of around Rs 2,000 crore, much of which carries a high interest of 20 per cent per annum.
The company has kept the options open for a private placement, follow-on public offer or QIP to raise the balance equity amount, which would strengthen the balance sheet.
Return to profitability is likely to comfort the investors ahead of the share sale exercise. Cement manufacturers such as Kesoram were enjoying strong demand and a robust margin in the second half of the last year.
In the fourth quarter, Kesoram posted a net profit of Rs 41.1 crore compared with a Rs 441.5-crore loss a year ago. The company has adjusted a deferred tax asset (net) amounting to Rs 263.18 crore, which helped it post a net profit.
Total income went up to Rs 806.3 crore from Rs 498.8 in the fourth quarter of 2019-20.