Indo Rama to raise Rs 150 cr via QIP, convertible warrants

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Indo Rama to raise Rs 150 cr via QIP, convertible warrants

Indo Rama Synthetics board has given approval to raise around Rs 150 crore to Rs 200 crore via convertible warrants to promoters and also through qualified institutional placement.

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Indo Rama Synthetics board has given approval to raise around Rs 150 crore to Rs 200 crore via convertible warrants to promoters and also through qualified institutional placement.

The chairman and managing director of the company OP Lohia in an interview on CNBC-TV18 said the convertible warrants would be issued next month while they would take the QIP route in the next 12 months.

Below is a verbatim transcript of his exclusive interview with CNBC-TV18's Reema Tendulkar and Ekta Batra. Also watch the accompanying video.

Q: You have some fund raising plans, one part is via a QIP and the other is via convertible warrants to the promoters. How much is it that you are looking to raise and by when?

A: The convertible warrants will be issued next month and QIP will be done in the next 12 months. We are planning to raise Rs 150 crore to Rs 200 crore in total.

Q: How much would the convertible warrants give you straight away?

A: It will be Rs 80 crore.

Q: How much would you be raising via QIP and what sort of dilution would you be comfortable with?

A: We are going for convertible warrants so that there is no dilution. Our equity today is around 63% and by issuing the QIP and the warrants, we will be able to maintain our holding at around 63%.

Q: I didn't get the number you are raising via QIP?

A: QIP will be around Rs 60 crore to Rs 70 crore.

Q: You straightaway have got about Rs 80 crore which you will get in via the warrants. Where is this going to be utilized?

A: We are improving our power side. We are adding a power unit of around 11 megawatt which will make a self sufficient on the power side. We also have an oil based heating system that we are converting into coal based. All this will give us an EBITDA of around Rs 30 crore to Rs 40 crore a year from next year onwards.

Q: What's the kind of improvement in margins you will see on account of this generator?

A: This will improve our margin by 1%.

Q: In the first quarter of FY11, it was a bit of a tepid bottomline which you had. You incurred a net loss of around Rs 12.5 crore. What is your expectation for the entire fiscal?

A: The market has improved in the last two-three months. As you have seen cotton prices went up from Rs 23,000 per candy to Rs 41,000 per candy today. That has actually created more demand for the polyester side.

Cotton has never seen prices more than Rs 70 in India and today the cotton price is Rs 110 whereas on the polyester side, the prices have always remained between Rs 60 to Rs 80. Today also the prices are at Rs 80. That is creating an additional demand for polyester not only in India but worldwide.