Institutions, MFs lap up Emami's Rs 310-crore QIP

KOLKATA: Foreign and domestic institutional investors, including mutual funds, on Thursday lapped up 100% of personal-care products maker Emami���s QIP. The company mopped up around Rs 310 crore by issuing some 1,00,00,000 equity shares of Rs 2 each at Rs 310 per share to QIBs.

Speaking to ET, Emami director Mohan Goenka said: ���Around 8-10 investors collectively subscribed to QIPs. While the foreign investors mopped up some 65% of the total offering, domestic ones picked up nearly 35% of the total offering. The company intends to use the proceeds to retire debt which it had taken to part-finance its takeover of Mumbai-based Zandu Pharmaceutical Works last fiscal.���

Elaborating, Mr Goenka said: ���Post-takeover of Zandu Pharmaceutical and implementation of the recently announced restructuring of its FMCG and the realty business, Emami will have a debt of approximately Rs 450 crore on its books.��� These debts were taken at an interest rate of 11-12%.

���We intend to retire the company���s entire debt component in the current financial year itself, but in a phased manner. Apart from the QIP proceeds, Emami will also use internal accruals generated during the year to retire the debt completely by 2009-10. We will hopefully become a debt-free company by March 31, 2010,��� he added.

While the bulk of the Rs 310 crore will be used to retire the company���s debt, a portion of the issue proceeds will also be used to develop new products and invest in secured instruments to protect stakeholders��� interest, said Emami chairman RS Agarwal.

Incidentally, the QIP offering, coupled with the restructuring exercise, will scale down the promoters��� holding in Emami. The twin corporate development will bring down the promoters��� stakeholding to roughly 73% from their existing 87.84% and non-promoter holding to 27%.