A V Birla group company Aditya Birla Nuvo is planning to mobilize fresh equity of about Rs 1,500 crore, mainly to finance the group''s life insurance business. As the market conditions are improving, a rights issue is being considered. However, the group is also looking at options like preferential allotment and promoter-guaranteed fully-convertible debentures.
As company''s plans to raise Rs 4,000 crore from promoters through a warrant issue are unlikely to fructify, it is considering options for an equity infusion because. The company in April 2008 had allotted 20.5 million preferential warrants to Group Chairman Kumar Mangalam Birla at a conversion price of Rs 2,007.45, which are due to mature in September.
The company shares closed at Rs 528.10 on the Bombay Stock Exchange on April 29. On the back of mounting losses from life insurance, apparel retail, and BPO businesses, the company, on April 30, reported a loss of Rs 141 crore for the quarter-ended March 2009.
For the financial year (2008-09), the company incurred a loss of Rs 430.52 crore, against a net profit of Rs 150.78 crore in the previous year. Birla Sun Life, its life insurance venture saw operating losses rise 57 per cent to Rs 686.56 crore during the year-ended March 2009, against Rs 437.60 crore in 2007-08.
The group had lined up capital expenditure of around Rs 1,000 crore during the current financial year, while another Rs 800 crore will be required in 2010-11, a senior company executive said. As company''s debt is already high, it requires equity to expand. The company''s dept in the previous fiscal was Rs 4,300 crore, while its net worth was Rs 3,744 core.
It also had a treasury surplus of Rs 800 crore, which gives it a net gearing of 0.93. Hence, Aditya Birla Nuvo has little room to raise fresh debt. The company''s main focus is on the life insurance business as over half of its revenue is expected to come from this sector by the end of 2010-11, the year when Birla Sun Life Insurance is expected to break even.
As company''s plans to raise Rs 4,000 crore from promoters through a warrant issue are unlikely to fructify, it is considering options for an equity infusion because. The company in April 2008 had allotted 20.5 million preferential warrants to Group Chairman Kumar Mangalam Birla at a conversion price of Rs 2,007.45, which are due to mature in September.
The company shares closed at Rs 528.10 on the Bombay Stock Exchange on April 29. On the back of mounting losses from life insurance, apparel retail, and BPO businesses, the company, on April 30, reported a loss of Rs 141 crore for the quarter-ended March 2009.
For the financial year (2008-09), the company incurred a loss of Rs 430.52 crore, against a net profit of Rs 150.78 crore in the previous year. Birla Sun Life, its life insurance venture saw operating losses rise 57 per cent to Rs 686.56 crore during the year-ended March 2009, against Rs 437.60 crore in 2007-08.
The group had lined up capital expenditure of around Rs 1,000 crore during the current financial year, while another Rs 800 crore will be required in 2010-11, a senior company executive said. As company''s debt is already high, it requires equity to expand. The company''s dept in the previous fiscal was Rs 4,300 crore, while its net worth was Rs 3,744 core.
It also had a treasury surplus of Rs 800 crore, which gives it a net gearing of 0.93. Hence, Aditya Birla Nuvo has little room to raise fresh debt. The company''s main focus is on the life insurance business as over half of its revenue is expected to come from this sector by the end of 2010-11, the year when Birla Sun Life Insurance is expected to break even.
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