Shree Cement Ltd on Monday, September 25, announced that its board has approved a proposal to raise up to Rs 700 crore through an issue of non-convertible debentures (NCD) on a private placement basis.

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The secured, rated redeemable and taxable NCDs with a base issue size of Rs 350 crore with an option to retain oversubscription of up to Rs 350 crore will be allotted on September 26, 2023, at a face value of Rs 1,00,000 each for cash at par, the cement manufacturer said in a filing to the stock exchanges.

The date of maturity of the NCDs to be issued on a private placement basis to certain eligible investors is October 26, 2030.

The interest will be payable on an annual basis and on redemption, Shree Cement said.

The cement maker in July had announced that it was looking to expand its clinker and cement manufacturing capacity to boost its business operations across the country.

The company had announced a proposed investment of Rs 7,000 crore, to be funded through internal accruals and debt, for the expansion plans.

The existing cement capacity of the company, including that of its subsidiaries, is 49.9 million tonnes per annum. The utilisation rate of the company stood at 70 percent in FY23.

The company proposes to set up a 3.65 million tonnes clinker plant at Pali in Rajasthan and cement units of 6 million tonnes capacity in Pali (Rajasthan) and Etah in Uttar Pradesh.

Shree Cement also plans a 3.65 million tonnes clinker plant at Kodla and cement capacity of 6 million tonnes in Kodla and Bengaluru in Karnataka.

The capacity is proposed to be added by the end of March 2025.

Brokerage Bernstein last week downgraded Shree Cement along with two other cement makers citing limited room for improvement in operating margins due to high fuel inflation.

Bernstein downgraded Shree Cement to underperform and reduced its target price from Rs 23,187 per share to Rs 22,341 per share, implying a potential downside of 14 percent.

Shree Cement shares were trading lower by 0.34 percent at Rs 25,844.85 apiece on BSE at 10.48 AM.