The Telegraph
Since 1st March, 1999
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Texmaco lines up 1:1 rights issue proposal

Calcutta, Nov. 4: Texmaco would issue rights shares to its shareholders, the company informed stock exchanges today.

The company has convened a general meeting of its shareholders on November 8 to seek approval to its proposed rights issue.

The K. K. Birla promoted company is expected to issue rights shares in the ratio of 1:1 at a premium of Rs 20, say sources familiar with Texmaco’s plans. It would still be at a substantial discount to Texmaco’s current market value of Rs 83.

No official confirmation on the price and the ratio for the rights issue could be obtained from the company. Texmaco has an equity base of Rs 5.16 crore. “The company is expected to raise Rs 15.48 crore through its rights issue,” said a source.

The company recently entered into an agreement to sell a leasehold property in Mumbai to the K. Raheja group for Rs 21.5 crore. “This income is likely to exempted from tax and translates into an extra-ordinary earning of Rs 41.64 per share. What is more, the company appears to have posted a remarkable turnaround thanks to the upturn in the engineering industry,” said an analyst.

The funds raised through the rights issue and the sale of property would be used to pay off debts and upgrade production facilities, said sources.

Industry observers say the rights issue could lead to increase in the promoters’ control. The Birlas and Poddars jointly hold 54.26 per cent of the company’s shares. The promoters — at least one of the families — will pick up the rights shares that are relinquished.

Meanwhile, Calcutta-based stockbroker and investor Shyam Sundar Dalmia has built an 11 per cent stake in Texmaco. The stake was built largely through acquisitions from the secondary market.

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