Preferential issue to raise Rs 50 crore for funding power plant

Kohinoor Mandal

Kolkata, Oct. 24

Equity shares and convertible warrants of Phillips Carbon Black Ltd (PCBL) are being issued on a preferential basis to the associates of promoters and ICICI Bank. The RPG group company is raising approximately Rs 50 crore for funding its 30-MW power plant at Durgapur in West Bengal.

Convertible Warrants

Among the promoters' associates are Adorn Investment Ltd, Universal Industrial Fund Ltd and Off-Shore India Ltd. The company is issuing 30 lakh convertible warrants on a preferential basis. At present, these outfits already have stakes in the company. While Adorn Investments holds 7.17 per cent (12.72 lakh shares), Universal Industrial Fund holds 0.52 per cent (91,650 shares) and Off-Shore India holds only 250 shares.

Apart from this, 30-lakh equity shares will be issued to Meenakshi Mercantile Ltd, Anjana Projects Ltd and Silvercross Marketing Pvt Ltd. Five lakh shares will be issued to ICICI Bank Ltd. Another 10 lakh convertible warrants will be issued to Lend Lease Company (India) Ltd. At present, the promoters' holding is Phillips Carbon Black is around 54 per cent.

Raising Funds

Talking to

Business Line

, Mr Sudhir Sahgal, Managing Director of the company, said these outfits are either associates of the promoters or ICICI Bank. No new partner is being brought in. "The purpose of the issue is to raise funds for the project. So, both the promoters and ICICI Bank decided to use some of their ventures to invest the money in the company," Mr Sahgal said.

Earlier, the company had considered a rights issue but it was dropped. "The reason is simple. A right issue takes almost four to five months to complete and we needed the money to start the power project as early as possible," he said.

Trading Agreement

The total cost of the 30-MW power plant is Rs 115 crore. Apart from the equity issue of Rs 50 crore, the remaining money will be raised through debt. PCBL, which is India's biggest carbon black manufacturer and the ninth largest in the world with a capacity of 2.7 lakh tonnes per annum, had planned to set up the power plant long back.

This is Phillips Carbon Black's second power unit. The first one is located at Baroda and its capacity is 12 MW. It has a power trading agreement with Adani Power Trading Corporation. "We have entered into a power selling agreement with our sister concern CESC Ltd," Mr Sahgal said. Out of 30 MW, approximately 20 MW will be sold to the power utility.

(This article was published in the Business Line print edition dated October 25, 2006)
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