Grasim Industries has selected five investment banks as advisors for its proposed rights issue to raise up to Rs 4,000 crore as the flagship company of the $60 billion Aditya Birla Group looks to implement its highest ever capital expenditure plan, multiple industry sources with knowledge of the matter told Moneycontrol.
"The firm has picked Axis Capital, Kotak Mahindra Capital, Jefferies and BofA Securities and SBI Capital for the rights issue," one of the persons above said.
Two other persons confirmed the syndicate of bankers adding that depending on market conditions, the deal was likely to be launched before the end of the financial year,
All the three persons above spoke to Moneycontrol on the condition of anonymity.
An email query sent to Grasim was left unanswered at the time of publishing this article. Axis Capital declined to comment while Moneycontrol could not elicit an immediate comment from the other four banks.
GRASIM: RIGHTS ISSUE RATIONALE
On 16th October, Grasim, a leading producer of viscose, diversified chemicals, linen yarn and fabrics, announced that its board had approved raising of funds not exceeding Rs 4,000 crores via a rights issue.
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The firm has a market cap of 1.24 lakh crores and its stock has risen by 8 and a half percent in the last 6 months.
It's stock exchange disclosure added, "The proposed rights issuance by Grasim aims to fund the ongoing capital expenditure plan, repay existing borrowings, and support general corporate purposes. In its transformational growth journey, Grasim is implementing its highest ever capital expenditure plan. The Company has raised debt to part fund the on-going capital expenditure plan and the funds raised by this issue will also be largely used towards growth capex. The capital outlay for the Company to establish itself as India’s second largest decorative paints player is on track."
The disclosure further highlighted the participation of the promoters and promoter group and said that they would fully subscribe to their rights entitlement and also to the unsubscribed portion, if any, "demonstrating their deep conviction in Grasim’s growth prospects."
42.75 per cent stake is held by the promoter category, according to latest data on the exchanges.
The Grasim board or a duly constituted Committee of the Board will decide all other terms and conditions of the rights Issue, including but not limited to the issue price, rights entitlement ratio, record date, timing, terms of payment as may be required from time to time.
THE GRASIM UMBRELLA
Leveraging the Aditya Birla Group's synergies, Grasim has launched "Birla Pivot", the B2B online marketplace for building materials and has also entered the paints business. Through its subsidiaries, UltraTech Cement and Aditya Birla Capital, it is also India’s top cement producer and a leading diversified financial services player. The company reported consolidated net revenue of Rs 1,17,627 crore and EBITDA of Rs 20,478 crore in FY 2023.
In September, Grasim unveiled the brand name of its paints business, ‘Birla Opus’. The market launch of Birla Opus is scheduled for Q4FY24.- It had previously committed Rs 10,000 crores for this segment and its six manufacturing plants will have a total capacity of 1,332 mlpa (million litres per annum).
Indicating the plans to become a profitable number 2 player in the coming years, Kumar Mangalam Birla, Chairman, Aditya Birla Group said at the brand launch, “Our foray into decorative paints is a strategic portfolio choice that enables us to tap into a high-growth market and expand our presence in the vibrant Indian consumer landscape. Our paints business will build on the power and trust associated with the Aditya Birla brand.
Last week, Ultratech Cement announced the third phase of expansion saying it would add another 21.9 mtpa ( million tonnes per annum) with an investment of Rs 13,000 crores taking the overall domestic capacity to 182 mtpa.
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