NEW DELHI, February 4: The Swedish giant AB Electrolux is hiking its stake in the ailing Intron Ltd from 51 per cent to 74.21 per cent. Electrolux will acquire the additional 23.21 per cent stake by subscribing to additional shares in Intron's proposed rights issue. The company's equity base is being expanded to about Rs 32 crore from Rs 15.77 crore.The infusion of fresh equity is being done to bring out the company from the purview of the Sick Industries Companies Act (Sica), besides augmenting its long-term working-capital requirements.
On January 12, Intron's board of directors approved a rights issue at par. The firm had accumulated losses of Rs 24.26 crore till March 1997 on an equity base of Rs 15.77 crore. During the 15-month period ended March 1997, the company incurred a loss of Rs 5.50 crore.
Electrolux's proposal to hike its stake via subscription to an unsubscribed or the renounced portion of the rights issue has been cleared by the Foreign Investment Promotion Board (FIPB). Intron'sproposal to hike Electrolux's stake was accompanied by the company's board resolution, recently made mandatory by the FIPB in cases of a rise in the foreign partner's stake.
Intron was granted foreign-collaboration approval by the government for the manufacture of automatic-programmable washing machines and automatic driers.The company, initially run by domestic promoters in technical collaboration with a British company, ran into trouble soon after commencing production, owing to stiff competition in the washing-machine segment.
Subsequently, Electrolux took over the company by acquiring 51 per cent stake via a preference issue of equity shares at a face value of Rs 10 per share in 1995. The company started manufacturing the Kelvinator brand of washing machines after its takeover by Electrolux.
The Industrial Finance Corporation of India (IFCI) also holds about 5 per cent in the company. The financial institution acquired the equity after conversion of cumulative convertible preference shares (CCPS)issued to it two years ago. The IFCI had also given the company a term-loan of about Rs 3 crore.
After the conversion of the CCPS, Electrolux had subscribed to an additional 5.2 lakh equity shares at par to maintain its stake at 51 per cent.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
