Grasim appoints SBI, Axis advisors for Rs. 4,000cr rights issue
What's the story
Grasim Industries has enlisted the help of Axis Capital, Jefferies, Kotak Mahindra Capital, and SBI Capital as advisors for its upcoming rights issue, which aims to raise up to Rs. 4,000 crore.
As per Moneycontrol, the flagship company of the Aditya Birla Group plans to use the funds for its largest-ever capital expenditure plan.
The deal is expected to take place before the close of the fiscal year, subject to market conditions.
Details
Rights issue rationale and stock exchange disclosure
On October 16, Grasim revealed that its board had given the green light to raise funds up to Rs. 4,000 crore through a rights issue.
According to the company's stock exchange disclosure, the planned rights issuance will finance ongoing capital expenditure projects, repay existing loans, and support general corporate activities.
Grasim's promoters have committed to fully subscribing to their rights entitlement and any remaining portion, showcasing their confidence in the company's growth potential.
What Next?
Grasim's expansion into the paints business
The company is venturing into the paints industry with its Birla Opus brand, set to hit the market in Q4 FY24.
Grasim has allocated Rs. 10,000 crore for this sector and established six manufacturing facilities with a combined capacity of 1,332 million liters per annum (MLPA).
Aditya Birla Group's Chairperson, Kumar Mangalam Birla, stated during the brand's launch, "Our foray into decorative paints is a strategic portfolio choice that enables us to tap into a high-growth market."
Insights
Grasim has EBITDA of Rs. 20,478 crore in FY23
Recently, Ultratech Cement, a Grasim subsidiary, revealed the third phase of its expansion, which will increase capacity by 21.9 million tons per annum, and require an investment of Rs. 13,000 crore.
Grasim Industries, through its subsidiaries Ultratech Cement and Aditya Birla Capital, stands as India's leading cement producer and a prominent diversified financial services provider.
It has a consolidated net revenue of Rs. 1,17,627 crore and EBITDA of Rs. 20,478 crore in FY 2023.