Ispat promoters likely to infuse Rs 1,000 cr
The promoters of Ispat Industries are likely to infuse between Rs 1,000 and Rs 1,500 crore to fund the ongoing capital expenditure programme, reports Suman Layak.business Updated: Dec 17, 2007 22:17 IST
The promoters of Ispat Industries are likely to infuse between Rs 1,000 and Rs 1,500 crore in the company to fund the ongoing capital expenditure programme. The company informed the exchanges that its board would consider preferential allotments of equity and other instruments on December 22.
Ispat Industries is promoted by Pramod Mittal and Vinod Mittal, younger brothers of steel billionaire L.N. Mittal. The company had set out a capital expenditure programme of Rs 2,500 crore last year. However, a part of that plan was derailed because of the restrictions imposed on foreign currency convertible bonds. Now, the promoters are likely to bring in the cash.
A part of the expansion has been taken care of by forming a coke-oven joint venture with Stemcor for a Rs 900-crore project. Ispat will hold 24 per cent stake in the venture and would invest around Rs 74 crore. The remaining investment will be used to set up a mini-blast furnace, enhance hot-rolled coil capacity and set up a pellet plant.
IDBI is the biggest institutional investor in the company with a 9.54 per cent stake. IFCI and ICICI also hold a significant amount of shares. The total holding by institutions is a little over 25 per cent.
Sources indicated that the infusion of equity by the promoters — through a combination of equity warrants and convertible instruments — would be designed to ensure that the total equity dilution remains below 5 per cent.
The company’s shares closed at Rs 77.90 on BSE, down 1.45 per cent on a day when indices across board fell sharply following a globally weak trend. The company ended tha half year ended September 30, 2007 with a net profit of Rs 21.91 crore on sales of Rs 3,907 crore.