Rajapalayam Mills stock hits 5% lower circuit after it updates on fund raising for expansion project

24 Feb 2022 , 12:12 PM

The Board of Directors of Rajapalayam Mills Ltd at their meeting held on October 30, 2021 had given their approval for Capacity addition of 166 Nos. of Looms and establishment of Fabric finishing process with a capacity of 50,000 meters per day at an estimated Project cost of Rs330 crore. 

Further, in addition to the above, the Board, in their subsequent meetings had also approved other Capital expenditure proposals for modernizing the Spinning Mills, establishment 110 KVA substation to cater the power requirement of proposed Fabric processing Unit, expanding the capacities of Two for One (TFO) machine capacity and the total Project Cost stands revised as Rs430 crore.

The Company has tied up necessary Term Loans from Banks. To part fund the projects, the Board, at their meeting held on January 27, 2022 had given its approval for raising of funds by way of Rights issue of Equity Shares upto the value of Rs60 crore.

Now, for funding the balance amount of projects and the incremental cost of modernization, the Board at their meeting held February 23, 2022 has decided to sell further investments held by the Company in the shares of The Ramco Cements Limited upto a value of Rs80 crore.

Summary of funding plan is:
Term Loan from Banks – Rs280 crore

Raising of Fund through Equity – Rs60 crore
Sale of The Ramco Cements Limited Shares to M/s. Ramco Industries Limited (inter-se transfer among Promoter)  – Rs10 crore

Sale of The Ramco Cements Limited Shares to Public in single or multiple tranches – Rs80 crore

Based on the approval of the Board of Directors dated 27-01-2022, the Company has sold 1,13,050 Shares to Ramco Industries Limited on 07-02-2022 for a net consideration of Rs9.97 crore.

At around 12:15 PM, Rajapalayam Mills was trading at Rs908.60 apiece down by Rs47.85 or 5% on the BSE.