The board of Kesoram Industries will meet on May 14 to consider raising funds by way of equity with the aim to bring down high cost borrowing.
A notice to the bourses said the capital raising could be in the form of rights issue/ follow on public offer or QIP apart from ADR/GDR and FCCB.
The market expects the company, headed by Manjushree Khaitan, could raise up to Rs 600 crore in two tranches. The possibility of a rights issue appears to be strongest at this point, market participants noted, even as a QIP can not be ruled out either.
The stock jumped by 7 per cent after the news hit the bourses and stock closed at Rs 78.35 a share.
The capital raising by way of equity follows the company, flagship of Basant Kumar Birla Group, borrowing Rs 2060 crore by issuing bonds to institutions such as Goldman Sachs and Edelweiss, offering as much as 20.75 per cent interest.
The high cost debt was taken to swap debts of a clutch of 11 Indian banks and infuse much needed working capital for optimum operation of the cement business.
P. Radhakrishnan, whole time director & CEO of Kesoram, had then guided that the high cost borrowing was an interim arrangement and the company would look to repay it before the maturity with equity and cheaper debt.
The company management believes that a debt level of Rs 1,400 crore would be optimum for the balance sheet if the operation manages to score Rs 400 crore odd of annual EBIDTA (earnings before interest depreciation, tax and amortisation).
