Bhushan Steel today said it plans to raise up to Rs 700 crore by April through a rights issue to part-finance its ongoing expansion projects.
"Our board has approved raising of up to Rs 700 crore through the rights issue. We intend to hit the markets in the next three months after securing all the necessary approvals," Director (Finance) Nittin Johari told PTI.
He added that the money will be utilised to part-finance the company's expansion activities, particularly in Odisha, where it is setting up a new 3 million tonnes per annum plant. The plant is scheduled to be operational in the next fiscal.
The company, which currently has debt of about Rs 13,000 crore, also intends to retire some of it after raising the funds, the Bhushan Steel Director (Finance) said.
The company currently has a production capacity of 2.5 MTPA and it produces secondary steel products like cold-rolled sheets and galvanised coils and sheet from its three manufacturing facilities at Uttar Pradesh, Maharashtra and Odisha.
For the quarter ended December 31, 2011, it posted a marginal 1.33% decline in net profit to Rs 276.62 crore from Rs 280.35 crore in the corresponding quarter of 2010-11.
However, its net sales rose by about 24% to Rs 2,407.06 crore during the quarter from Rs 1,942.74 crore in the same period of FY11.
"Profit declined largely due to depreciation and higher payouts on interest during the October-December quarter," Johari said.
According the company's filing to the BSE, its expenditure on depreciation of assets was Rs 151.6 crore, a rise of over 165%, while its interest outgo was over 124% higher at Rs 229.04 crore during the quarter.
In November, 2011, it had announced the settlement of a nine-year-old family dispute, following which Bhushan Steel was to be owned and controlled by Brij Bhushan Singhal and his younger son Neeraj, while ownership of Bhushan Power and Steel was given to Sanjay, the elder son of the senior Singhal.
Shares of the company were being quoted at Rs 340.10 apiece on the BSE during late afternoon trade, down 2.87% from their previous close.