Kesoram Industries, a BK Birla group company, has enhanced its fundraising through equity issuance to ₹400 crore from ₹200 crore as decided earlier.
At its meeting held on Wednesday, the fund-raising committee of directors deliberated on various options, including plans to increase the size of equity raising in line with the long-term objective to reduce debt and give equal opportunity to all shareholders.
Subsequently, the committee decided to cancel the proposed preferential issue to Usinara Trading and Services, a company associated with the promoters, and instead increase the rights issue to ₹400 crore from ₹200 crore and open the rights issue for all investors.
The company would decide on the record date to ascertain the eligible investors at a separate meeting.
Earlier, the board had approved rights issue of up to ₹200 crore out of the proposed fundraising proposal for ₹600 crore to be raised in one or more tranches.
The committee believed that the cancellation of preferential allotment and increase in rights issue size is in the company’s best interest. It helps in reduce the leverage, said the company, which manufactures tyres for automobiles and cement.
Money from the rights will flow much faster compared to the issuance of warrants in which only 25 per cent of the exercise price would be received upfront and the balance in 18 months.
It provides an opportunity for all shareholders to participate in the rights issue and help reduce the high-cost debt of the company. The rights issue will improve the company’s liquidity position, leading to an upgrade in rating faster.