New Delhi:
Promoters of Essar Steel will infuse equities worth up to Rs 1,000 crore into the loss-making steelmaker by acquiring its shares on a preferential basis.
The move is aimed at meeting the company's capex and operational requirements as well as strengthening its capital base, Essar said in its annual general meeting (AGM) notice, seeking shareholders' approval.
The AGM will be be held on Saturday, 28 September, in Hazira, Gujarat.
The capital infusion by the promoters will also help the company in reducing strain on its balance sheet as its consolidated net loss had widened by over 2.5 times in the last fiscal year to Rs 5,105 crore. Its interest payments had also risen by over 32 per cent to Rs 2,955 crore.
Essar Steel's current liabilities (Rs 21,498.48 crore) exceeded its current assets (Rs 9,593.19 crore) by Rs 11,905.29 crore in 2012-13.
The unlisted leading steelmaker has proposed to make the preferential allotment in next 12 months to the promoters. Following this, promoters' stake in the company will increase marginally by 0.18 per cent to 97.45 per cent.
"Resolved that...consent of the company be and is hereby accorded to the Board of Directors of the company to issue and allot...on preferential basis such number of equity shares... for an amount not exceeding Rs 1,000 crore to Essar Steel Asia Holdings Ltd, Mauritius/Essar Steel Ltd, Mauritius...," the notice said.
The Ruia family - headed by Shashi and Ravi Ruia - are the promoters of the company through Essar Steel Asia Holdings Ltd, Mauritius.
According to Essar's annual report, its promoters infused Rs 764.86 crore equity into the company between November, 2012 and June, 2013 by acquiring over 16.81 crore shares.
As of March 2013, the company's paid up equity capital was Rs 2,798.20 crore.
"In order to raise balance funds and to meet fund requirements, enabling resolution is required as proposed at item no 10 of the (AGM) notice," the company said.
It said it has approached a chartered accountant for valuation of shares and number of shares to be allotted would be decided accordingly.
Last month, the company had taken shareholders' approval to raise a minimum of Rs 2,241 crore by selling three non-core assets for paring some of its $4 billion (around Rs 26,000 crore) debt and reducing the strain on its balance sheet.
Essar also has plans to raise $2 billion through pre-export finance to retire majority of its rupee-denominated debt and is aiming to complete it during the current fiscal year (FY14).
The move would help the company in reducing interest costs by about Rs 850 crore, enhancing loan tenure and negating the impact of fluctuation in currency rates.
The company, which has invested Rs 37,000 crore to increase its capacity to 10 MTPA, has already secured Reserve Bank's permission for raising dollar loans.
The move is aimed at meeting the company's capex and operational requirements as well as strengthening its capital base, Essar said in its annual general meeting (AGM) notice, seeking shareholders' approval.
The AGM will be be held on Saturday, 28 September, in Hazira, Gujarat.
The capital infusion by the promoters will also help the company in reducing strain on its balance sheet as its consolidated net loss had widened by over 2.5 times in the last fiscal year to Rs 5,105 crore. Its interest payments had also risen by over 32 per cent to Rs 2,955 crore.
Essar Steel's current liabilities (Rs 21,498.48 crore) exceeded its current assets (Rs 9,593.19 crore) by Rs 11,905.29 crore in 2012-13.
The unlisted leading steelmaker has proposed to make the preferential allotment in next 12 months to the promoters. Following this, promoters' stake in the company will increase marginally by 0.18 per cent to 97.45 per cent.
"Resolved that...consent of the company be and is hereby accorded to the Board of Directors of the company to issue and allot...on preferential basis such number of equity shares... for an amount not exceeding Rs 1,000 crore to Essar Steel Asia Holdings Ltd, Mauritius/Essar Steel Ltd, Mauritius...," the notice said.
The Ruia family - headed by Shashi and Ravi Ruia - are the promoters of the company through Essar Steel Asia Holdings Ltd, Mauritius.
According to Essar's annual report, its promoters infused Rs 764.86 crore equity into the company between November, 2012 and June, 2013 by acquiring over 16.81 crore shares.
As of March 2013, the company's paid up equity capital was Rs 2,798.20 crore.
"In order to raise balance funds and to meet fund requirements, enabling resolution is required as proposed at item no 10 of the (AGM) notice," the company said.
It said it has approached a chartered accountant for valuation of shares and number of shares to be allotted would be decided accordingly.
Last month, the company had taken shareholders' approval to raise a minimum of Rs 2,241 crore by selling three non-core assets for paring some of its $4 billion (around Rs 26,000 crore) debt and reducing the strain on its balance sheet.
Essar also has plans to raise $2 billion through pre-export finance to retire majority of its rupee-denominated debt and is aiming to complete it during the current fiscal year (FY14).
The move would help the company in reducing interest costs by about Rs 850 crore, enhancing loan tenure and negating the impact of fluctuation in currency rates.
The company, which has invested Rs 37,000 crore to increase its capacity to 10 MTPA, has already secured Reserve Bank's permission for raising dollar loans.
