NEW DELHI, Dec 23: Gammon India Ltd's Rs 17-crore, 1:2 rights issue is likely to delayed by at least three months due to the adverse market conditions. The company was expected to tap the shareholders in January 1998. According to a company official, Gammon has been forced to postpone the issue in view of the prevailing market conditions. The rights issue is now expected to open not before March 1998. The official said the date of the issue would be decided in a board meeting.

Gammon India is planning the rights issue as part of its resource mobilisation programme for meeting its working capital requirements and acquire equipment. The delay in raising money would not affect Gammon resource mobilisation plan as the company is not facing any cash crunch at present, the official said.

As the price of the rights issue at Rs 40 is pegged at a steep discount to the current market price, it is a way of rewarding the shareholders, the official pointed out.

The Gammon India scrip is currently trading at a much higher premium to the offer price at Rs 190 (the last traded price on December 5, 1997). The scrip has fallen to the current level after touching a peak of Rs 232 on November 12, 1997. In fact, the stock has been hardly traded on the bourses.

The company will offer equity shares in the ratio of two shares for every one share held. The company will be raising fresh equity after a gap of 10 years. The rights issue comes close on the heels of the managing director, Abhijit Rajan, raising his stake in the company from 20 per cent to 37 per cent. The board of directors of Gammon India had earlier decided to redesignate the present chairman, Peter Gammon as chairman emeritus, who still holds 13 per cent stake in Gammon India. However, the company is yet to take any decision regarding this.

Post-rights, the company's equity capital will go up from Rs 2.16 crore to Rs 6.36 crore. The company has over Rs 250 crore worth of orders on hand and is negotiating further orders worth Rs 150 crore.

Gammon India has also chalked out a Rs 40-crore investment plan which will mark the company's foray into the infrastructure sector and a new 50:50 joint venture for cooling tower business.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.