The foreign promoters can now raise their stake in Kerala Chemicals up to 46 per cent from the current 35 per cent. There is also an RBI stipulation barring the foreign promoters to exceed their stake in Kerala Chemicals beyond 46 per cent. This will also ensure the foreign promoters pick up the unsubscribed portion in the rights.

According to the leadmanager SBI Caps, although KSIDC and the foreign promoters have subscribed to their rights entitlement to the tune of 61 per cent of the issue size, the public response has been very poor.

Some institutions, who hold 10 per cent in Kerala Chemicals, have backed out from subscribing to the issue, said a company source, adding that it will take some more time to arrive at a final subscription figure.

The retail response to the issue is reflected in the response from the Chennai-region, where only two applications were collected. The company offered the shares in the ratio of 1:1 at a much higher premium to the market price. The scrip went ex-rights in June at Rs 60 against an offer price of Rs 75.

Just a few days before the opening of the issue (on July 15), the scrip was hovering around Rs 48 and after hitting this low, the stock saw a steep rise to Rs 70 in just seven trading sessions with a sharp spurt in daily volumes. However, the scrip could not hold on to this level and slipped to a low of Rs 52 in 16 trading. The turmoil in the stock markets also contributed to the poor public response apart from a high premium. Now, the share is hovering around Rs 58.75.

Among the financial institutions, UTI is the largest shareholder with 1.8 lakh shares, SHCIL 1.16 lakh shares, IFCI 51,842 shares and IDBI 43,600 shares.

The foreign promoters, who are also the technical collaborators, had obtained clearance from the KCPL board to pick up a part of the unsubscribed portion.

Nitta Gelatin had been trying to have a clear control over Kochi-based Kerala Chemicals as it plans to make India its base for south Asian operations.

KCPL, the second largest ossein manufacturer in the country, tapped the shareholders to part finance the forward integration plan to manufacture gelatine from ossein. Nitta Gelatine Inc is providing the technology for the Rs 77.5-crore diversification project. Besides the rights issue, other means of finance include Rs 26 crore from term loans and Rs 20 crore as internal accruals.