According to company officials, institutions, which hold the key to the success of the rights offer, have indicated their willingness to subscribe to the offer. ``So far, talks have progressed in a positive direction,'' said V M Mohan, general manager, corporate finance. The financial institutions, including UTI, LIC and GIC, hold a little over 30 per cent in the company. Post-rights, the book value of the stock will drop to Rs 50 from its March 1998 level of Rs 75.70. The equity capital will rise from Rs 64 crore to Rs 128 crore.

India Cement is also in the process of getting the issue underwritten although promoters have expressed their willingness to pick up additional stake in case of renunciation of the rights offer. The issue,being lead managed by DSP Merrill Lynch, has four other managers including ISEC and Jardine Fleming. ``The issue may be partially or fully underwritten,'' adds Mohan. The promoters currently hold close to 33 per cent in India Cement while the public holding is at 8 per cent.

The issue proceeds will go towards financing of the company's acquisition of Raasi Cement, which it took over in a protracted battle early this year. The total cost of acquiring Raasi is estimated at Rs 445 crore while a greenfield project of similar size would have cost Rs 900 crore. The Raasi plant has a total capacity of 2 million tonnes.

The company has already tied up the loan component of Rs 180 crore with ICICI at 17 per cent per annum. The loan has a duration of seven years. ``We can make advance payments and there will be no penalty charged by ICICI,'' said Mohan. Besides, the company plans to make a private placement of equity shares to some funds, including foreign ones. ``The size of private placement is likely to be Rs 40crore which will be made at a much higher price,'' said Mohan, adding that the placement has to be made before February 23, when the AGM resolution relapses. India Cement will also issue preference shares worth Rs 25 crore to a group of investors, where the coupon is likely to be over 12 per cent.

The remaining amount of Rs 30 crore is likely to come through internal accruals or selloff of its divisions.

India Cement, which is looking for a buyer for its shipping, paper and ceramics divisions, has already sold one of its four ships for Rs 25 crore. ``Since the sector is not doing well, we are not getting the right price. We plan to hive off the division into a separate company, before selling it,'' said Mohan. The company, which has the current debt-equity ratio of over 2, plans to bring down the same to around 1.3 by 2000. According to officials, India Cement is now in the process of consolidation after acquiring Raasi and Vishaka cement plants. While Raasi will be merged in the current fiscal, theVishaka unit will be merged with India Cements only in fiscal 2000.

India Cements is targeting a turnover of Rs 1500-1600 crore by 2000 from the current level of Rs 900 crore. ``We have seven cement plants in our folds and production has gone up from 3 million tonnes to 6.5 million tonnes,'' said Mohan. The company has a current nameplate capacity of 6.5 million tonnes but is currently operating at 7.5 million tonnes. ``With a bit of debottlenecking and fine tuning, we can produce 8 million tonnes,'' added Mohan.

Company officials expect the demand for cement to pick up in six to eight months. ``The government is serious about infrastructure projects. If concrete roads are built, it will require loads of cement since one kilometre of road requires 2500 tonnes of cement,'' elaborated Mohan. ``The country has tremendous scope for growth in cement manufacture. While China's manufacturing capacity is 400 million tonnes, ours is only 95 million tonnes. Similarly, our per capita consumption is 60-70 kg perannum against China's 220-250 kg,'' he added.

The company is geared to take advantage of a boom in cement business, as and when it takes place. With an expenditure of only Rs 70-80 crore, India Cement can augment its capacity to 9 million tonnes, putting it almost at par with Cement giant, ACC. The company does not plan to acquire any more plants at the time being but may go for further acquisition with a reasonable capacity in north India after the current phase of consolidation is over. ``Acquiring a plant in the north makes economic sense instead of transporting the same from our southern plants,'' Mohan said.

Amidst the current slowdown, the company has tightened its belt by offering VRS to its employees and shifting to wind mills and captive plants for power generation. ``We have laid off 1100 employees in the last three months. While the VRS has cost us Rs 30 crore, we will save Rs 10 crore per annum. Again, captive plants help us produce power at Rs 1.80 per unit against the state electricityboard's rate of Rs 3.80 per unit,'' said Mohan, adding that the company is saving Rs 5-6 crore annually through wind power generation at one of its plants which has 44 windmills.