The Hindu Business Line : Rs 80-crore OCL India rights issue soon

Rights info
SEBI clears the proposal filed by the company.
For every six shares of OCL one new share would be offered.
For this issue UTI Bank is the merchant banker

Kolkata , July 5

The Orissa-based OCL India Ltd, producers of Konark brand of cement, would soon hit the market with a Rs 80-crore rights issue. The funds would be used for its capacity expansion programme.

According to Mr Rakesh Malhotra, Chief Finance Officer of OCL India, SEBI has recently cleared the proposal filed by the company. For every six shares of OCL one new share would be offered.

"We may come to the market with a month or so. For this issue our merchant banker is UTI Bank", Mr Malhotra told Business Line.

OCL India is giving final touches to its expansion programme where capacity of its Rajgangpur plant would be increased to 3.8 million tonnes per annum from 1.8 million tonnes per annum at a cost of Rs 700 crore.

The project would be funded through a mix of debt, equity and internal accruals. According to Mr Malhotra, the debt:equity ratio of the expansion project would be 1.5:1.

Apart from the ensuing rights issue, the company is looking at all sorts of options for raising debt and equity. "We have several options and we would go for the most suitable one", he said.

For the debt component, OCL India may garner funds both domestic and international banks and financial institutions.

Talking about future projects, he said, the company has taken an in-principle decision of setting up a big captive power plant after the completion of the expansion programme.

"Our first target is the expanded cement plant", he said.

About a month back, OCL India has commissioned a 15 MW captive power plant based on the waste heat generated by its sponge iron unit, which too is located at Rajgangpur in Orissa. The cost of setting up this power plant was Rs 50 crore.

For the quarter ended March 31, 2006, OCL's sales increased by 23 per cent to end at Rs 207.25 crore as against Rs 168.75 crore in the corresponding quarter of the previous financial year, 2004-05. Net profit jumped to Rs 11.56 crorefrom Rs 9.48 crore.

The company ended 2005-06 with a sales of Rs 700.82 crore (Rs 570 crore). Annual net profit increased to Rs 37.79 crore from Rs 28.17 crore.

At the BSE, the OCL scrip increased by 2.71 per cent and ended at Rs 144 against the previous closure of Rs 140.20. On Wednesday it opened at Rs 143.75 and reached a high of Rs 144.