Grasim to issue rights shares at Rs1,812 each to raise Rs4,000 cr

Grasim Industries Limited, the flagship company of the Aditya Birla Group, has come out with a rights issue to raise about Rs4,000 crore.

The company will issue 22 million equity shares at Rs1,812 per share, which is a 12 per cent discount to the company’s share price on Thursday (4 January 2024).   

The board of Grasim Industries on Thursday approved the rights issue and fixed 10 January 2024 as the record date.

The rights issue will be made on a partly-paid basis with Rs453 per share upfront payment along with the share application. Payment of the remaining Rs1,359 will have to be made on or before March 2026.

The terms and conditions of the share issue like number and quantum will be decided by the board before March 2026.

Grasim's rights issue will open on 17 January and close on 29 January 2024.

Shareholders will be entitled to six rights shares of Grasim for every 179 shares that they own in the company.

Shareholders can make on-market rights renunciation up to 23 January 2024.

A rights renunciation is when a shareholder wants to give up his or her rights in favour of other investors at a price. This is done by an investor who is unwilling to accept the rights offer and wants to sell shares of the company to another person.

On-market renunciation is when rights are renounced on the exchanges at a better place. It is generally done 3-4 working days before the issue closes, which in this case is 23 January 23.

Renunciations can also be done off-market, but this can only be  done till the issue closes so that the buyer has enough time to apply for the rights issue.

The rights issue will result in an equity dilution of 3.3%. Promoters held 42.75 per cent equity in the company as of the end of the September quarter.

Grasim plans to use the rights issue proceeds to fund the ongoing capex plan, repay existing borrowings, and support general corporate purposes.

Grasim Industries Limited, which was incorporated in 1947 as a textiles manufacturer, has evolved into diversified company with major presence across products such as viscose, chemicals, linen yarn and fabrics. The company recently entered the paints business under the brand ‘Birla Opus’ with plans to set up six plants across India for manufacturing decorative paints.

Through its subsidiaries, UltraTech Cement, Aditya Birla Capital and Aditya Birla Renewables, it is also India’s prominent cement producer, leading diversified financial services player and clean energy solutions player. 

Grasim employs 43,000 people. The company reported consolidated net revenue of Rs1,17,627 crore and Earnings before interest, tax, depreciation and amortization (EBITDA) of Rs20,478 crore in FY 2023.