Co’s board okays issue of five crore shares to institutional investors.

Our Bureau

Kolkata, Nov. 18 Exide Industries is planning to raise funds through private placement of fresh issue of equity shares or other equity derivatives to tap future investment opportunities in the areas of technology infusion, acquisition and others, according to sources.

Investments requirements, if any, to scale-up the domestic capacities will be met from the internal accruals.

The stock reacted negatively to the fund raising plans, on equity dilution worries, after the company’s board of directors approved issue of five crore shares to institutional investors. The company shares closed 4.76 per cent lower at Rs 114.15 compared to the previous closing price at the NSE.

In a notice issued to the stock market on Wednesday, the company stated that its board of directors have approved an issue of up to five crore equity shares or derivatives convertible into equity shares to qualified institutional investors.

Exide, currently, has an equity base of 80 crore shares of Re 1 each. Accordingly, an issue of 5 crore equity shares will amount to 6.25 per cent of the company’s expanded equity base.

While company officials were not available for comments, sources close to the development told Business Line that the company was yet to decide about the timing of the issue and its exact quantum.

“The issue is considered keeping in view of possibilities of future investment requirements in the areas of technology infusion and others,” a source said. He, however, stressed that the company was yet to finalise any such specific investment plan.

“Any such investment possibility, if (it) comes up, may be too big to be financed through internal accruals,” he said. On why the company preferred equity route over borrowing to fund such future investments, the source said that the “the liquidity condition in the market may be reduced in the future”.

On the domestic capacity expansion plan, the source said that the company was consistently increasing its capacities to meet the domestic demand for automotive batteries and global demand for industrial batteries.

“We are hopeful to meet the capital requirement for domestic capacity augmentation from our internal resources,” he said.

(This article was published in the Business Line print edition dated November 19, 2009)
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