The company is seeking shareholder permission to raise the authorised capital ceiling via the preferential issue of shares, debentures and other securities to the foreign institutional investors, financial institutions, and mutual funds, aggregating Rs 300 crore.

To accomodate the further issue of redeemable cumulative preference shares of the company, Enkay Texofoods is enhancing the authorised share capital from Rs 45 crore to Rs 57.50 crore by creation of 1.25 crore new redeemable cumulative preference shares of Rs 10 each.

At present, the company's authorised share capital is Rs 45 crore divided into 3.25 crore equity shares of Rs 10 each and 1.25 crore redeemable cumulative preference shares of Rs 10 each. The company is seeking shareholders' approval on theabove issue.

The company has also proposed a resolution to enable it to buy back its equity shares, as permitted by law.

As part of its expansion plans, the company is installing five packaging machines for packs of 250ml and necessary preparatory lines and balancing equipments.

According to company sources, the investment in installing these packaging machines is around Rs 30 crore. This amount will be invested in stages, they said. Besides, taking into consideration other such investments, the total amount to be invested in the expansion plan is Rs 50 crore.

Recently, the installed capacity of Onjus was increased from 28,350mt to 36,354mt to cater to the increased demand.

Sources said the company is obtaining shareholders' permission to raise up to Rs 300 crore through the preferential issue for augmenting long-term resources so as to deploy funds as and when needed.

Enkay Texofoods are the makers of Onjus tetrapak fruit drink. The company's total turnover and other income amounts to Rs 202.98crore during the seven-month period ended March 1998, which is 10 per cent higher than the previous period last year.

During the quarter ended September 1998, net sales stood at Rs 116.17 crore. Net profit during the period was Rs 2.54 crore. The company operates two divisions: the textile division which posted sales of Rs 153.99 crore during the seven-month period ended March 1998, and the fruit processing division in which the company made its entry only last year.

INSIGHT

Improving working capital will be a better option: Enkay Texofood is continuing its trend of raising funds through redeemable preferential issues. However, the disturbing fact is that the company intends to raise Rs 300 crore when its current balance sheet size is Rs 277.25 crore (as at end-March 1998). Worse, around 50 per cent of its balance sheet is blocked in working capital. Further, around 40 per cent of its sales is blocked with debtors. Rather than raising funds the company could do better by improving itsworking capital scenario.