New Delhi, Feb 25: Whirlpool of India is considering a rights issue for fresh infusion of capital into the company. The company is expecting capital infusion in the region of Rs 70-Rs 110 crore.Whirlpool of India president and managing director Garrick D'Silva told The Financial Express that the company's board of directors has given an in-principle approval for expanding the capital base at a meeting held here on Monday.
The exact expansion of capital is contingent on the proposed merger of Whirlpool Financial and the evaluation thereof, he added.
The company would now begin discussion with partners, large shareholders and bankers on proceeding with the rights issue. Whirlpool will subscribe to its share of 56.26 per cent in the rights issue, D'Silva added.
The proposed infusion of Rs 70-110 crore would include any premium that may be attached to the rights issue.
It is widely believed that the capital expansion had become necessary to protect erosion of the company's net worth due to themounting losses suffered in the last few years. It had suffered losses to the tune of Rs 161.14 crore by December 1996. In the first half of 1997, the company had reported loss of Rs 57.73 crore.
The company board had, at its last meeting on January 15, approved the merger of Whirlpool of India and Whirlpool Financial India Private Ltd. The merger had been necessitated by the US-based white-goods major's decision to exit from the consumer financing business.
The merger ratio is being worked out at present by the auditors of the two companies--S R Batliboi & Co and the Mumbai-based Raiji & Co. The ratio is expected to be finalised by April. The total holding of the parent company Whirlpool Corporation is expected to go up from the present level of 56 per cent once the merger is effected, as the finance company is held by the Whirlpool of India and the Mauritius-based Whirlpool Finance.
The company would seek fresh approval from the Foreign Investment Promotion Board (FIPB), once the decision on therights issue and the merger formalities are completed.
The fresh infusion of funds coupled with the merger would ease the funds crunch being faced by the white-goods company. It would also enable the company to leverage cheaper borrowings in the market.
Whirlpool of India had an authorised share capital of Rs 100 crore as on December 31, 1996. Of this, the subscribed portion was only Rs 39.23 crore on that date. In addition, the company had a surplus of Rs 354.51 crore at the end of the calender year 1996.
In contrast, Whirlpool Financial India has a subscribed equity-share capital of Rs 143 crore, though it is authorised to raise up to Rs 300 crore.
Copyright(c)1998 Indian Express Newspapers (Bombay) Ltd.
