On a strong footing

Calcutta, Nov. 6: Jessop & Co, which hopes to come out of the Board for Industrial and Financial Reconstruction (BIFR) with the help of its rights issue, is exploring new options to raise fresh capital. This could be done through a public offer.

The flotation could either be in the form of a fresh issue of shares or through a dilution in promoter Pawan Ruia’s stake. The move will not only bring in expansion cash but also help Jessop meet Sebi’s guidelines on minimum public holding.

Since the government did not subscribe to the recently concluded Rs 50-crore rights issue, Ruia’s stake has risen to 95 per cent from 72 per cent. Only 1 per cent is with the public. According to Sebi norms, listed companies must have a public shareholding of at least 25 per cent.

“We have to see whether it is a fresh equity or a stake sale. But it is certain that we will raise capital. However, we are yet to decide on the amount,” Ruia told The Telegraph.

Listing the company on Bombay Stock Exchange and National Stock Exchange will give its performance greater visibility, he said.

Jessop is also open to the idea of a private placement to strategic or financial investors. This will be over and above the public issue that the company plans to launch.

“We had received many offers when the company was taken over by us. We are not in talks with anyone at present,” Ruia added.

Jessop is looking at a number of collaborations to explore new avenues of business. The partnership could extend from technology to financing.

Ruia said the company would consider ship repairing and port infrastructure development, apart from a new coach building factory.

Since the government’s stake has now fallen to about 4 per cent, Ruia would have much stronger say in running the company, including raising resources from markets. Earlier, the government had the power to veto any special resolution since it had more than a 26 per cent stake.

The company is set to come out of the BIFR by the end of this fiscal. This would also give it more freedom in taking decisions, including new investments and selling off stakes.

During this fiscal, Jessop expects a turnover of Rs 100-120 crore and a net profit of Rs 9-10 crore.

Next year, it is aiming at a Rs 200-crore turnover.

Ruia had taken over the company amidst huge furore through the Centre’s process of disinvestment in 2003.

In order to come out of the BIFR net, Jessop had reduced the face value of the share from Rs 10 to Re 1 and then made a rights issue offering 5.5 shares for 1 held at par.

This financial engineering has turned its net worth positive and paved the way for it to come out of the BIFR net.