Nirma Eyes Overseas Markets

Nirma Ltd, the Karsanbhai Patel-promoted detergents giant, plans to forge strategic alliances and subsidiaries abroad to expand its presence. The company is also doubling its borrowing limit to Rs 1,500 crore to tap funds for the implementation of ongoing projects.

The company will move a resolution seeking shareholder approval for investing funds abroad in subsidiaries or joint ventures. The permission, being sought under Section 372 of the Companies Act, will enable Nirma to set up joint ventures or subsidiaries overseas.

Section 372 of the Companies Act stipulates that a company cannot invest more than 30 per cent of the networth of another company without seeking government and shareholder permission.

 

Nirma is also doubling its borrowing limit to Rs 1,500 crore from Rs 750 crore. The aim being to raise further debt to part-finance its expansion programme, which include a soda ash plant and production of detergents and toilet soaps at Bhavnagar in Gujarat.

The complete complex at Bhavnagar will cost Rs 1,037 crore, which will include an equity component of Rs 162.83 crore, internal accruals of Rs 359.45 crore and foreign currency and term loans of Rs 449.90 crore.

Nirma is also setting up a linear alkyl benzene plant as a part of its backward integration programme.

The company is also reclassifying its preference shares into equity shares. Nearly 2,000 four per cent redeemable cumulative preference shares of 100 each are to be reclassified into 20,000 equity shares.

Nirma is one of the countrys largest detergent producers selling over 4.5 lakh tonnes of detergent and having the largest market share in the low-value mass market brands. Nirma powder sells more than Hindustan Levers Wheel, though Hindustan Lever is the largest producer of detergents and toilet soaps put together.