COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

ICL to fund Raasi Cements takeover through Rs 1.6b rights issue

India Cements Limited will partly fund the takeover of Raasi Cements Limited through a rights issue aggregating Rs 1.60 billion, ICL chairman N Srinivasan said in Bombay today.

He said the Securities and Exchange Board of India has cleared the company's offer to issue one share for every share held by the existing shareholders at a price of Rs 25 per share (face value of Rs 10 and a premium of Rs 15).

The rights offer will open this month.

The total share capital of Raasi Cements is Rs 4.45 billion. ICL, its subsidiaries and associates control 90 per cent of RCL. The cost of acquiring RCL would be funded through borrowings amounting to Rs 1.80 billion, the Rs 1.60 billion rights issue, Rs 250 million realised from the sale of a ship, Rs 250 million from issue of preference shares and Rs 540 million from internal accruals and private placement of equity.

The cement division of RCL would be merged with ICL during the current financial year. Srinivasan said that currently ICL enjoys a market share of 23 per cent for cement in South India. He hopes the company to capture over 30 per cent marketshare during this financial year.

Srinivasan said that a consolidation phase in the cement industry was underway and he expects large players to dominate in the long-run. On the downtrend in cement prices, he said that prices remain low during this time of the year.

He added that as demand picks-up during the first quarter of 1999, the price situation would also improve.

ICL has added 1.8 million tonnes of existing capacity consequent to the acquisition of RCL.

With the acquisition and proposed merger, ICL's plants would be strategically located in Andhra Pradesh and Tamil Nadu.

The company expects to achieve substantial savings in labour, power and fuel costs through voluntary retirement scheme and rationalisation of labour.

To strengthen its position in the south, the company has acquired the 0.40 million tonne Yerraguntla plant of Cement Corporation of India and 100 per cent equity in the 0.90 million tonne plant of Visaka cement industry through group companies.

UNI

Business news