NEW DELHI, April 24: Swil India is tapping the market yet again for its Rs 595-crore copper project -- this time to part-finance the cost over-run of around Rs 130 crore. The Calcutta-based company is now coming out with a Rs 115 crore rights-cum-public issue of 17.5 per cent FCDs of Rs 100 each. While the public portion is around Rs 53 crore, the 3:13 rights offer is around Rs 62.41 crore. Two years ago, Swil had tapped its shareholders with a Rs 59 crore issue for the same project.With the uncertain market conditions Swil India seems to have taken adequate precautions to see the issue through. The entire public portion of Rs 53 crore has been underwriten by I-Sec, IDBI, SBI and CD Capital Markets.
Besides, it has also applied to its bankers for a bridge loan. In addition, the technical collaborator, Boliden of Sweden, has agreed to subscribe to the issue either directly or through an associate company up to an amount of Rs 9 crore. The promoters, too, have said they will apply for additional FCDsbeyond their rights entitlement.
The cost of the copper project coming up at Bharuch in Gujarat has gone up from Rs 464 crore to Rs 595 crore. This cost escalation is attributed to the inclusion of a captive power plant and additional equipment as well as exchange fluctuation. The 50,000 tpa Bharuch plant, which is now slated to commence production next month, will produce copper cathodes for mainly captive consumption for production of copper alloy wires. Around 20,000 tpa of copper cathodes will be exported.
According to the draft prospectus filed with Sebi, the FCDs are to be converted into appropriate number of equity shares at the end of 17 months after allotment. The conversion price will be at 80 per cent of the average daily closing price on BSE three months prior to the date of conversion.
However, the conversion price will not exceed Rs 20 and will not be less than Rs 15. Compared with the current market price of Rs 23.50, the conversion band does not seem too attractive.
Financially, too,Swil is not on a strong wicket. For the year 1996-97, the company posted a 5 per cent drop in turnover and a 60.44 per cent drop in profit growth. Domestic demand was poor and exports were not too encouraging either. Due to the sluggish economic conditions in the first-half, Swil's net profit dropped to Rs 58 lakh compared with Rs 1.60 crore. As the company generally posts better first-half results, the full year net profit is unlikely to be higher than last year. Swil's equity has increased to Rs 8.37 crore from Rs 7.37 crore on account of the conversion of the FCDs issued in 1996.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
