NEW DELHI, July 8: For Zuari Agro Chemicals' shareholders, the rights issue priced at Rs 10 could be as good as a bonus considering the current market price. The company is offering 1.31 crore shares in the ratio of 1:1 to its shareholders while the current market price is hovering around Rs 126.

In fact, more than the public shareholders, the financial institutions would benefit from the current rights issue as they hold around 50 per cent of the total paid-up capital of the company.

Zuari's scrip was last traded at BSE on July 4 at around Rs 126. On the NSE, the share is trading at a discount to the BSE price at Rs 121.45 (volume of 400 shares). The share has been witnessing very low volumes in the range of 300-400 shares on both the NSE and BSE during the last two months. The ex-rights price on BSE has been continuously falling from Rs 295 on January 13, 1997 to Rs 115 on June 13, 1997, which was close to its 52-week low of Rs 114.

Since then, the stock started rising and touched the current level. The current price at Rs 126 on BSE is still not very far from the share's 52-week low and the downward risk seems to be limited.

The rights issue from Zuari Agro comes close on the heels of Cadbury's rights issue at Rs 140, which was offered at half the prevailing market price.

Post-rights, the paid-up capital of Zuari Agro Chemicals at Rs 13.13 crore will double to Rs 26.26 crore. The promoters United Steel Corporation and KK Birla group hold 27 per cent of the equity in the Goa-based fertiliser company and the public holding is around 23-24 per cent.

The proposed rights issue is to meet the working capital requirements of the company. Lead managed by JM Financial, the issue opens on July 16, 1997 and closes on August 13, 1997.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.