Mumbai: Auto and industrial battery maker Exide Industries Ltd plans to raiseRs150 crore through a rights share issue to build its cash reserves amid a large capacity expansion, which currently is under way.
The proposal sent Exide’s shares up. The company’s stocks closed at Rs60.15 on Tuesday—up 6.65% from Monday.
The company on Tuesday said its board approved the issue of 50 million rights shares at Rs30 each in the ratio of one rights share for every 15 held.
“It is basically to augment the long-term resources,” said T.V. Ramanathan, Exide’s chief executive, over the telephone. “Our internal accruals are robust enough to meet expansion.”
Exide plans to spend Rs450 crore over three years to expand capacity by about 60% to meet rising demand from telephone network operators, industries and automotive companies.
India largest battery maker plans to make 10 million two-wheeler batteries and seven million four-wheeler batteries in 2007-08.
Exide also owns half of ING Vysya Life Insurance Co. Pvt. Ltd, which plans to increase its capital base.
The insurer has said the company’s board would meet in September to consider raising capital.
“The insurance business is a high growth area and we will invest to maintain our stake,” Ramanathan said.
Exide expected its revenue to rise by a fifth each year backed by a strong industrial expansion and auto sales, he added.
Exide’s rival Amara Raja Batteries Ltd, 26% held by US-based Johnson Controls Inc., is in the middle of a more than Rs250 crore expansion.