BK Birla Group flagship Kesoram Industries’ board on Saturday approved a plan to raise up to Rs 2,500 crore to lower the cost of borrowings to replace high-cost NCDs and OCDs.
The company had raised about Rs 1,900 crore non-convertible debentures (NCDs) and optionally convertible debentures (OCDs) in the past for bank debt restructuring at nearly 20 per cent interest rate through a private placement.
The company may raise the fresh funds by way of equity, bond or foreign currency floats. One of the options the company could be looking at closely is an overseas bond issue. Even if fully hedged, the interest cost to Kesoram would be in the range of 10 per cent, thereby bringing down finance cost almost by half. The management believes there would be appetite for a bond sale of a cement company from overseas investors.
The company recently had a rights issue of Rs 400 crore.
With Rs 200 crore raised as part payment from the rights offer, the working capital issue has been largely resolved, officials said.
The remaining Rs 200 crore will be collected later. “The company is expected to be Rs 550-600 crore EBITA (earnings before interest taxes and amortisation) company in FY’22. And this will rerate the company in terms of borrowing capabilities,” the officials said.