Sterlite rights seen in Rs 670-800 range

Sterlite Industries announced a price range of Rs 670 to Rs 800 per share for its proposed rights issue. The rights issue will raise around Rs 1,400 crore for the company.

Sterlite had announced, in December, that it is coming out with a 1:1 bonus issue followed by a 3:10 rights issue for the expanded share capital.

The Sterlite scrip closed at Rs 631.30 on the Bombay Stock Exchange yesterday.

The money raised through the rights issue will be used to fund expansion projects in group entities Bharat Aluminium Company and Hindustan Zinc.

Sterlite's existing equity base of Rs 17.9 crore consisting of 3.59 crore paid-up equity shares of a face value of Rs 5 is expected to swell to close to Rs 47 crore, with around 9.33 crore paid-up equity shares after the rights issue.

Earlier, its global holding company Vedanta Resources had raised around $1 billion on the London Stock Exchange and holds around 55 per cent in Sterlite.

Apart from Vedanta, 7.1 per cent is held by Madras Aluminium Company and about 21.2 per cent by the Indian public. Sterlite has slated a total investment of around $2 billion over 3 years in 4 expansion projects.

The company will be investing $800 million for the expansion at Balco to take the installed capacity to 3.5 lakh tonne per annum and $800 million for setting up an alumina refinery in Orissa with a capacity of 1.4 million tonne per annum.

Out of the proceeds of the Vedanta IPO about $225 million will be utilised for Balco and $400 for the alumina refinery at Orissa.

Sterlite has also lined up $465 million for capacity expansion at HZL and about $100 million for its copper smelter. HZL had raised about $125 million though the external commercial borrowings route for funding its capacity expansion.