The company is meeting to consider rights issue, preferential warrants for the promoters and also for the sub-division of the shares to Rs 10.

Amidst wild speculations which were based on the previous track record of the company when rights were announced earlier, market analysts pegged the rights at a price of Rs 60, given the pre-condition where after the sub-division of the shares, the face value would stand at Rs 10 instead of Rs 100.

It should be recalled that the company had on two other occasions resorted to rights issues in order to raise funds. The first rights issue was announced in January, 1988 in the ratio of 1:2 pegged at the prevailing market price of Rs 120 to Rs 140, while the second rights waspegged at Rs 4,000 in November, 1994 in the ratio of 1:10.

The market was rife with rumours that although the rights issue could be pegged at a discount of over 20 per cent to the prevailing market price, the preferential warrants would be priced at a hefty premium to the market price, considering the replacement value of the stock.

Although on the day of the announcement on December 3, the stock markets reacted negatively to the news of the rights issue with the stock hitting the lower end of the price band at Rs 827.75, the subsequent day saw the stock recover substantially. On Monday, the stock flared up from the day's low of Rs 830.25 to a high of Rs 868 to finally close at Rs 862.50, registering a net gain of 3 per cent, with a phenomenal volume of over 6 lakh shares exchanging hands on the local bourses.

Market observers attribute the recovery to the renewed market perception of the company's move to instill investor confidence, rather than a mere fund raising technique.

``Although the rightsissue has come at a time when the cement commodity cycle is weak, one should not merely consider the move as a fund raising exercise. It should be perceived more as a means to enrich shareholders value by the promoters,'' explained Hiren Ved of Prime Securities.