Apart from the public issue, the promoters of Welspun Syntex, friends and relatives are together subscribing OCCPs worth Rs 30-crore. A part of the Welspun group, the company is now mobilsing resources for part financing its ongoing project for setting up facilities for manufacturing specialty polyester filament yarn (PFY) with a total capacity of Rs 19300 mtpa and expanding its polyester yarn texturising capacity by 4250 mtpa at a total cost of Rs 186 crore.

Besides the present issue of Rs 73 crore, Rs 55 crore is coming by way of a rupee loan from IFCI, Rs 47.5 crore asforeign currency loan, Rs 6.35 crore from lease assistance and Rs 5 crore as unsecured loan from promoters.

FCDs with a coupon of 17.5 per cent will be converted into equity shares between 9-12 months from the date of allotment. At the option of the investors OCCPs will be converted into equity shares after the end of 24 months from the date of allotment and before the end of 59 months.

The conversion price will be determined by taking 70 per cent of the average BSE price of the stock prior to three months from the conversion date. FCDs and OCCPs have a cap price of Rs 20 and a floor price of Rs 10. However, the conversion will result in a massive jump in equity which will dilute future earnings. Even the company's EPS projections at Rs 10.22, Rs 6.06 and Rs 3.8 for the fiscal years beginning 1999 seem optimistic.

At the minimum conversion price, the equity will jump from Rs 6.3 crore to Rs 79 crore and to Rs 43 crore at the minimum price. For fiscal 1997, net profit dipped to Rs 23 lakh against Rs92.43 lakh in fiscal 1996.

On BSE, the scrip is currently quoting at Rs 16.5. The scrip had been trading between Rs 25 and Rs 15 (from March 1997 and June 1998). Post-issue, promoters' stake will come down from 58.6 per cent to 42-43 per cent. The issue closes on June 8.