The IBP board asked the government to shed its equity holding in the company from 59.6 per cent of the paid up capital to 51.01 per cent by way of a public issue and private placement, in order to raise about Rs 60.33 crore for its growth plan.
According to a detailed plan sent to the government for cabinet clearance, altogether 37,34,500 equity shares are proposed to be offloaded in the market at a price and time to be decided by the board in consultation with the merchant bankers, once the cabinet clears the proposal.
The company is however, expecting to price its Rs 10 share at around Rs 220 on the expectation that a bonus issue of one for every two shares just before the public issue would shore up its shares to Rs 300 in the market.
The number of shares to be offered has been kept limited so that the government holding is kept pegged at a little over 51 per cent -- at 51.01 per cent. The funds collected through the proposed issue would finance a Rs 597-crore growth plan. Rs 476 crore would be raised through institutional finance. However, the company has to go for Rs 60.33 crore internal generation in order to keep the debt-equity ratio healthy.
Another public sector company which has sought government permission is the National Aluminium Co (Nalco), for taking up 26 per cent in the paid up capital in the 100 per cent export oriented unit of International Aluminium Products (IAPL) for production of 50,000 tonnes of rolled products per annum. According to the proposal, the equity would be acquired at par at the cost of Rs 30.82 crore.
The investment does not need a clearance from the Public Investment Board as the total investment is well under Rs 50 crore, said an official. Only proposals over Rs 50 crore need PIB clearance. The Planning Commission has already cleared the investment. The finance ministry has given an in principal clearance.
Nalco entered into two agreements relating to IAPL in 1995--to supply liquid metal, water, power, etc to the company and to buy 26 per cent in the equity of the company.
The total project cost for the EOU is Rs 228.50 crore which includes margin money of Rs 10.75 crore for working capital.
The project would be financed through equity capital of Rs 118.56 crore--44.24 crore by GEM, 6.32 crore by Mukand, 3.16 crore by FATA and Rs 64.84 crore through private placements. The remaining Rs 109.94 crore would come as buyers credit from Efibanca of Italy. The credit is guaranteed by ICICI and SBI.
