Sterlite to raise Rs12,500 crore; Q2 adjusted net more than triples

After delivering the best ever financial performance in its history on the back of strong non-ferrous metal prices, Sterlite Industries is planning to diversify into power generation. The company would raise up to Rs12,500 crore from private placements and overseas equity or convertible bond issues.

Sterlite has filed regulatory statements in the US for an American Depository Shares (ADS) offering. The ADS would be listed on the New York Stock Exchange and the company may raise up to $2 billion, according to media reports.

The funds would be used to set up a 2,400 MW power plant in Orissa at an expected cost of $1.9 billion. The power business would be under a seprate subsidiary, Sterlite Energy. Sterlite may also part-finance the expansion plans of its subsidiaries, Hindustan Zinc and Balco, which have proposed to set up a new zinc smelter and an integrated mining project and power plant respectively.

Sterlite is also planning to buy out the remaining Balco stake held by the government. Sterlite had acquired majority stake in Balco when it was privatised by the previous NDA government in 2001 and had the option to buy out the remaining stake at a later date. However, the present government returned the payment made by Sterlite for acquiring the remaining stake after receiving legal advise that the government is under no obligation to divest its remaining holdings. The matter is currently under arbitration.

For the quarter ended 30th September 2006, Sterlite has reported a 68.39 per cent rise in standalone net profits to Rs136.56 crore as compared to Rs81.1 crore for the same quarter of previous year. Net revenues increased 92.21 per cent to Rs3,309.11 crore from Rs1,721.58 crore.

The company has booked a net amount of Rs133.67 crore for the quarter towards provisions on loans and investments and possible liability on guarantees issued, besides loss on sale of a business division. Adjusted for these one-time charges net profits have more than tripled to Rs270.23 crore.