Ashok Leyland to raise Rs 700 cr through QIP

Ashok Leyland is planning to raise about Rs 700 crore through a qualified institutional placement (QIP). In an announcement to BSE on Thursday, the company said its fund-raising committee had passed a resolution authorising the QIP be opened on June 26. A preliminary placement document in this regard had been filed with the regulator.

The floor price for the QIP, based on the Securities and Exchange Board of India’s pricing formula, was Rs 34.3 an equity share. When contacted, a company spokesperson said, “At this point, we don’t have anything to share. When we are ready, we will inform.” Citigroup Global Markets India is the joint global coordinator and book running lead manager for the proposed QIP.

Through the QIP, the company plans to issue up to 185,200,000 shares at a price band of Rs 35-38 a share (the company stock closed at Rs 37.9 on BSE on Thursday); the total issue size is Rs 703.8 crore. Sources said the proceeds from the QIP would be used for long-term funding requirement, repayment of existing loans, etc. This financial year, the company plans to invest Rs 200-250 crore on developing new products.

Between August 2013 and March this year, Ashok Leyland reduced its debt from Rs 6,163 crore to Rs 4,690 crore. Last year, the company funded its debt-reduction programme by selling non-core assets, including land and holdings other companies.

The company said by March 2015, it would improve its debt-equity ratio to 1:1. This, the company management said, would be achieved through a combination of better operational efficiency and working capital management, sale of non-operational assets and if the market is right then the company look at issuance or not.

Ashok Leyland Limited