Jindal Steel to raise Rs500 cr through rights issue

Jindal Steel to raise Rs500 cr through rights issue
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First Published: Sun, Jun 28 2009. 02 06 PM IST
Updated: Sun, Jun 28 2009. 02 06 PM IST
New Delhi: The country’s largest stainless steel producer, JSL Ltd, is planning to come out with a rights issue to raise Rs500 crore to part fund its Orissa project.
“In all likelihood, the company will come out with a rights issue in next 60 days aimed at raising Rs500 crore. Within 10 days JSL will start the work on the same,” a source familiar with the development said.
The O P Jindal-group company is looking to issue over seven crore shares to its existing shareholders which would strengthen the promoter’s stake by about 4% in the firm to 60%, a market source in the know of possible rights issue by the firm said.
When contacted, JSL Director (Strategy & Business Development) Arvind Parakh said, “The company has already got approval of its board to raise Rs500 crore to partly fund the equity component of the second phase of our Orissa expansion project. We are mulling at different options to raise the amount, including rights issue.”
The stainless steel major is undertaking Rs5,600-crore capacity augmentation programme in the second phase of the Orissa project to set up an 8-lakh tonne per annum (LTPA) mill to produce the alloy.
For funding the project, JSL has already raised about Rs4,400-4,500 crore in debt, and the rest is to be borne by the promoter and the company’s internal accruals.
The company has already installed a 250-MW power plant, a 2-LTPA ferro-alloy mill along with a 4.25-LTPA coke oven unit in the first phase of the project.
Along with its current 7-LTPA stainless steel mill in Hissar, JSL Ltd aims to reach an overall production capacity of 1.5 million tonnes per annum (MTPA) by March 2012.
The company is also planning to restructure its Rs4,300-crore debt to part fund the expansion of its Orissa project and avoid a possible default on the loans.
JSL’s debt-equity ratio stands at about 3:1 at present.
Waning demand for the alloy, followed by steep fall in prices and correction in raw material rates along with fluctuation in foreign exchange rate pushed the company to post loss in the third and fourth quarter as well as the whole of 2008-09 financial year.
JSL Ltd has reported a net loss of Rs609.45 crore for the financial year 2008-09. The company had a net profit of Rs266.30 crore during the year ended March 31, 2008.
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First Published: Sun, Jun 28 2009. 02 06 PM IST
More Topics: Jindal | Steel | Rights | Equities | Corporate |