It may be recalled that ICL, in March this year, had contemplated an optionally convertible debentures issue for funding Raasi takeover as the stock markets were down and cement industry was getting poor valuations. By going in for OCDs, the company would be able to raise the necessary resources while at the same time get better price for its share once the valuations improve. The OCDs were to be converted at the option of the holder after 15 months.

But with good pick-up in demand and prices, the cement scrips are being re-rated by the market. India Cements which was hovering at around Rs 30 levels has now moved up and is today changing hands at Rs 45levels after touching a high of Rs 50. This has prompted the company to opt for a direct equity issue as it would help in reducing the debt-equity ratio and consequently the interest cost.

ICL, according to market sources, was very close to concluding the deal but the Kargil flare-up affected the sentiments of the market and deal could not be put through. The approval granted by the shareholders for the equity or equity-related instruments issue is expiring by the end of this month and the company has decided to renew the approval in its next general meeting.

The Rs 445-crore Raasi takeover has been funded by equity to the tune of Rs 200 crore, debt Rs 180 crore, sale of a ship Rs 25 crore and balance through internal accruals. Of the Rs 200-crore equity, ICL has raised Rs 160 crore through a 1:1 rights issue at a price of Rs 25 per share and it is the balance Rs 40 crore which the company is seeking to raise. If the equity placement goes through, the ICL's debt-equity ratio would reduce further fromcurrent 1.8 levels.