Says a senior official of the company: "We are yet to collate the exact figures, but by and large the promoters have subscribed to the entire issue. The promoters had to pick up a lot of additional shares as the response from the shareholders was not very encouraging."

With the promoters subscribing to a major portion of the rights issue, a piquant situation has arisen. The objective of the rights issue was to implement a fund restructuring scheme which involved repaying the advances of Rs 10 crore taken from the promoters. Now, with the promoters pumping in money to see the rights issue through, it has become a classic case of taking from one hand and returning it through the other. The promoters, Balmer Lawrie & Company and Royal Packaging Industries Van Leer BV, had forwarded high-costinterest-bearing advances amounting to Rs 10 crore to finance the short-term requirements of the company. While the loan from Balmer Lawrie carried an interest of 18 per cent per annum, that from Van Leer was at Libor plus 1 per cent. As the rights issue has sailed through with the promoters' help, the latter will be repaid with their own money.

The tepid response to the 1:1 rights issue is understandable as the offer price of Rs 15 is much higher than the current market price. The scrip has been below par since late 1997 and was quoting at around Rs 6 when the board of directors approved the rights issue last year. In fact, the poor response from the shareholders had forced Balmer Lawrie-Van Leer to extend the closing date by 10 days to April 30. According to the company official, the promoters have brought in the entire issue amount of Rs 11.85 crore.

"After we get all the figures and are able to collate the public response, a portion of the promoter' money would be refunded. But there is no doubt thatpost-issue the promoters' stake will go up substantially," he added.

Post-issue, the promoters' stake will go up by over 20 per cent. The two promoters together hold around 61.76 per cent of the total paid-up capital of Rs 7.88 crore. Their stake may now go up to at least 80 per cent and the public shareholding will fall drastically from the current 20 per cent.

Balmer Lawrie-Van Leer has been in the red for the past two years. For the year ended 1996-97, the company incurred a loss of Rs 3.08 crore on a turnover of Rs 34 crore primarily on account of a high interest burden of over Rs 5 crore and poor sales realisation.

For the six months ended September 1997, the net loss was around Rs 1.6 crore on a turnover of Rs 21.99 crore. The company has embarked on a restructuring programme to correct its short-term asset-liability mismatch. Balmer Lawrie-Van Leer currently faces a short-term working capital mismatch and its short-term liabilities exceed the current assets by Rs 4.02 crore.

Balmer Lawrie-VanLeer manufactures and markets steel drum closure systems and plastic drums. The steel drum closure systems are sold under the brand name "Tri-Sure", which is a registered trademark of Royal Packaging Industries.

The plastic drums are sold under the brand name "Valerex" which is also a registered trademark of Royal Packaging. The products are sold to the two promoters -- Balmer Lawrie & Company and Royal Packaging.