Grasim Industries, an Aditya Birla group company, plans to raise ₹4,000 crore through rights issue to fund its ongoing capital expenditure and repay debt. The company is expected to begin its venture into decorative paint business in the March quarter.
The board approved the proposal to raise funds not exceeding ₹4,000 crore by way of a rights issue to the eligible equity shareholders as on the record date, said the company.
The proposed rights issuance by Grasim aims to fund the ongoing capital expenditure plan, repay existing borrowings, and support general corporate purposes, it added.
The promoters and promoter group have confirmed their participation. They will fully subscribe to their rights entitlement and also to the unsubscribed portion, if any, demonstrating their deep conviction in Grasim’s growth prospects.
Highest-ever capex
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.
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The capital outlay for the company to establish itself as India’s second-largest decorative paints player is on track. Moreover, the company has committed investment to sustain market leadership position in its core businesses Viscose and Chemicals. The rating agencies continue to reaffirm Grasim’s ‘AAA’ ratings.
The rights issue enables existing shareholders to participate in Grasim’s growth journey. The Board or a duly-constituted Committee of the Board would decide the terms and conditions of the rights issue and will be subject to applicable laws and regulatory/statutory approvals as may be required. The company intends to complete the said issue at the earliest, subject to market conditions and other factors, including the receipt of any regulatory approvals, it said.