Reuters reported that shares in Sterlite Industries Limited fell as much as 9% after the non ferrous metals producer said it raised USD 500 million in convertibles, its second major fund raising in 4 months.
Analysts said that the unit of London listed Vedanta Resources had raised USD 1.6 billion in July through an issue of American depositary shares and the latest convertible notes offering raised concerns of equity dilution.
Sterlite which the market values at USD 15.9 billion said that it would use the proceeds from the convertibles offering for its copper business expansion. Vedanta had approved the plan that would double Sterlite's copper smelter capacity to 800,000 tonnes per year at Tuticorin in south India. The project, which includes a 160 MW power project, will be commissioned in mid 2011. The funds raised in July were for developing Sterlite's power generation business in India, as well as for capital expenditure and planned acquisitions.
Mr Prasad Baji analyst at Edelweiss Securities said that "They have multiple things going the power projects, residual stake buyouts in group firms as well as expansion. Seems they are treating this as a fresh project and raising fresh funds.
He said that "The group typically looks for volumes, accompanied by bringing costs as low as possible. They seem to be following the strategy for the copper business."
Analysts said that the copper business expansion could also be an indication the company was not counting on its acquisition bid for bankrupt US copper miner Asarco LLC.
(Sourced fro Reuters)
