NEW DELHI, February 5: Indo Gulf Fertilisers & Chemicals, an Aditya Birla group company, plans to raise Rs 300 crore as equity through a public issue after its copper smelter plant goes fully on stream late next month, senior president, finance, NL Jain said.This would help the company command a better premium as the plant would boost earnings. Indo Gulf is setting up a Rs 1,850-crore one-lakh-tonne per annum copper cathode plant at Dahlej in Gujarat.
Although the issue is being slated in July this year, the company intends to meet its short-term funds requirement through short-term borrowings.
Meanwhile, the promoters of the company - Grasim Industries, Hindalco and Indian Rayon - have increased their stake by over 6.4 per cent to 32.41 per cent. The stake has gone up owing to the conversion of the Rs 100-crore 7 per cent fully-convertible debentures (FCDs), issued in July 1996, which were due for conversion after 18 months.
As per the terms of the preferential issue of fully-convertible debentures(FCDs), the conversion took place in January this year and have been converted into equity shares at Rs 52.77 per share (premium Rs 42.77), though the market price has been hovering around Rs 32.
The conversion has resulted in the equity going up by Rs 18.95 crore to Rs 206.12 crore from Rs 187.15 crore. The share premium account too has gone up by Rs 81.05 crore to around Rs 870 crore. The preferential issue was made to part-finance the copper smelter plant.
The promoters' stake, however, will come down to the earlier level of 26 per cent after the proposed public offer of Rs 315 crore is made in July this year, said Jain. The company was planning to tap the capital market early last year, but had to shelve the issue on account of poor market conditions. "The Rs 100-crore FCD issue in July 1996 was made to maintain the promoters' holding at around 26 per cent after the intended public/GDR issue," added Jain.
Although the FCDs carried a relatively low coupon of 7 per cent, it would result in aninterest saving of at least Rs 7 crore.
"The copper smelter plant is progressing as per schedule. The copper refinery is expected to start production in February and the total smelter is scheduled to begin operations in March this year," said Jain. The company's 80,000 tonne per annum copper rod plant is running smoothly. A part of the smelter, annode furnance, has also gone on stream. According to analysts, the copper smelter project, expected to be completed in a record time, would be able to meet a part of the massive demand shortfall of more than 2 lakh tonne of refined copper in the country, which is currently being met through imports.
The plant has been sourced from Outokumpu of Finland and Mim of Australia.
At a time when most corporates struggled to maintain their profitability, Indo Gulf reported an impressive performance in the first half of 1997-98. Turnover was up by 70 per cent from Rs 188 crore to Rs 319 crore.
Net profit zoomed by over 60 per cent to Rs 69.08 crore from Rs 43 crore inthe corresponding half of 1996-97. According to Jain, the full year could bring in more surprises as the company's annual output for 1997-98 is expected to be around 9.3 lakh tonne as against 6.68 lakh tonne in 1996-97.
"Indo Gulf is also shutting down its fertilisers plant temporarily in March-April this year to install the alternative feedstock, naphtha," he said. The company's plant is based on natural gas supplied on HBJ pipeline and and the current contracted supply is sufficient to produce full quantity of urea at optimum level.
But fluctuations in gas supply from ONGC (which is also in the process of upgradation and manintenance of its gas wells) at times has forced the company to have the flexibility of using naphtha as a fuel in primary reformer. This upgradation would help maximise and improve the Indo Gulf's productivity.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
