Financial Daily from THE HINDU group of publications
Saturday, Feb 07, 2004
Markets - IPOs
Shiva Cement may raise Rs 9.5 cr through rights-cum-public issue
Kolkata , Feb. 6
THE Rourkela-based Shiva Cement is hoping to raise a little over Rs 9.5 crore through a rights-cum-public issue some time in the middle of May, to fund its working capital needs and de-bottleneck its production unit.
This is the first move by the board of directors of Shiva Cement to raise funds after its proposed ECB (external commercial borrowing) of $7 million (approximately Rs 30 crore) from the Zurich-based Habib Bank hit a roadblock.
The company's funding programme suffered immensely by the Reserve Bank of India's decision. It asked banks to stop issuing guarantees for the ECBs of the domestic corporate houses. Shiva Cement worked out the ECB way back in September last year, for a low interest rate of 250 basis points above Libor.
Last week, the Shiva Cement's board of directors decided to issue 3.50 crore equity shares of Rs 2 each and also charge a premium of Rs 0.75. Accordingly the authorised capital base has been increased from Rs 13 crore to Rs 20 crore.
To keep options open, the board of directors stated that it would be a mix of public issue, rights issue, and convertible warrants. However, Mr R.P. Gupta, Managing Director, said that it would probably be a rights-cum-public issue.
"We will talk to merchants bankers and then take a final decision. Our aim is to raise as much capital as possible. So, we have kept all the options open. It also depends on the status of the capital market. At present, it is too volatile," Mr Gupta told Business Line.
About the timing of the issue, he said the company would first seek the shareholders' approval in the coming annual general meeting on February 28. "We hope to hit the market sometime in the middle of May, this year," he added.
Shiva Cement is currently making a preferential issue too. It had targeted to sell 2.95 lakh shares with a face value of Rs 2 and some something around Rs 8-9 crore. The issue is likely to be over by the end of the current financial year.
"I would not be able to disclose on the amount we have already raised through the preferential issue but I am afraid we may not be able to raise the targeted amount. Still, we will have to wait to final closure," Mr Gupta said.
The company has also mandated SBI Capital Markets to search and negotiate a strategic partner for it. This is the second time Shiva Cement decided to rope in a partner in the last three years. This decision was taken by its board of directors in their meeting held on August 27, 2003.
"Though representative from several companies visited our plant and office, still nothing concrete has taken place. Hence, it will not be proper on my part to make any comment on this matter," he said.
Industry sources said that Shiva Cement was forced to opt for the ongoing preferential issue and, now, the proposed rights-cum-public issue because fund infusion by strategic partner appeared to a distant possibility.
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