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Kohinoor Mandal

Kolkata , Aug. 28

THE board of directors of the Rourkela-based Shiva Cement have decided to make a preference issue of 2.95 lakh shares with a face value of Rs 2.

According to Mr R.P. Gupta, Managing Director of Shiva Cement, the board has also decided to charge a premium on the issue. The premium amount has not been finalised. The company has also not finalised the merchant banker for this issue.

"The premium amount will depend of the mood of the market, so it is not possible for me to say the exact premium that we will be charging. However, we can say that we are hoping to raise Rs 8-9 crore from the preference issue," Mr Gupta told Business Line.

According to him, the major part of the amount that will be raised through the preference issue will be used for long-term working capital and the rest for capital expenditure.

Meanwhile, the company has asked the global investment banker Merrill Lynch to hold talks with some of the Dubai-based banks for raising a $7 million foreign currency loan.

Currently, Shiva Cement is talking with a number of domestic banks and financial institutions such as IDBI, IFCI and State Bank of India for seeking the necessary deferred payment guarantee.

The proposed $7 million foreign currency loan, which comes to around Rs 30 crore , will have a repayment period of six to seven years. The interest rate of the loan is expected to be less than six per cent.

Currently, the total debt exposure of Shiva Cement is approximately Rs 25 crore, of which Rs 16-17 crore was used mostly as capital expenses and the rest for working capital needs. The interest rates of these loans are as high as 16 per cent.

Of the Rs 30 crore foreign currency loan, Rs 13.5 crore will be used to repay high cost debts, Rs 14.25 crore will be earmarked for working capital needs and the rest, Rs 2.25 crore will be used on capital expenses.

Earlier, Mr Gupta said the foreign currency loan would come in through before December, this year. "We will have to convince the banks and financial institutions to give us the deferred payment guarantee. IDBI and IFCI have agreed consider to our proposal. We will hold extensive dialogue with State Bank of India too," he said.

For the 18-month accounting period ending December 31, 2002, Shiva Cement has registered a turnover of Rs 35 crore. The net loss was approximately Rs 2 crore.

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