Sterlite lines up $2 billion ADS issue

Part of plans to raise Rs 12,500 cr for power foray.

Sterlite Industries, part of the London-based Vedanta Resources, plans to raise up to $2 billion (Rs 9,000 crore) through the issue of American depository shares (ADS).

It will be the biggest ADS issue by an Indian company and is a part of Sterlite's plans to raise up to Rs 12,500 crore. The rest will be raised through the issue of foreign currency convertible bonds or global depository receipts.

Sterlite's ADS issue will surpass that of Infosys, which recently received shareholders' approval to raise $1 billion.

The biggest ADS issues to come out of India so far include those of ICICI Bank ($500 million), Wipro ($500 million), HDFC Bank ($300 million) and Dr Reddy's Laboratories ($260 million).

The decision to float the ADS issue, taken by the Sterlite board today, will be placed before shareholders at an extraordinary general meeting on December 11.

After the issue, the shareholding of the promoter, Vedanta Resources, will come down from 76 per cent to a shade below 60 per cent.

The company will use the ADS proceeds to fund its push into the country's commercial energy business. It may also use them to exercise a call option to acquire the government's 29 per cent stake in Hindustan Zinc.

Sterlite will enter the energy business through its subsidiary, Sterlite Energy, which will set up a coal-based thermal power plant at Jharsuguda, Orissa, for approximately $1.9 billion (Rs 8,550 crore) over four years. The company also plans to bid for major power projects put up for tender by the government.

Following the announcement, the Vedanta Resources scrip in the London Stock Exchange fell 3.7 per cent to 1335 pence at 0837 GMT, even though the company also announced that it had quadrupled first-half earnings.

The Anil Agarwal-controlled company will increase the authorised capital from Rs 150 crore to Rs 185 crore, by creating an additional 175 million equity shares of Rs 2 each.

Sterlite net up 68% to Rs 136 cr

Sterlite Industries India has posted a 68.38 per cent rise in its second-quarter net profit at Rs 136.56 crore, against Rs 81.10 crore in July-September 2005.

The board has announced an interim dividend of 200 per cent, that is, Rs 4 per share (face value Rs 2 each).

Total income for the reporting quarter rose to Rs 3,330.5 crore from Rs 1,739.39 crore in the year-ago period.