Gujarat Alkalies 3:5 rights opens on Feb 9

The Vadodara-based Gujarat Alkalies and Chemicals Ltd (GACL), the country's largest caustic soda producer and government of Gujarat enterprise, has decided to make a rights offer to the shareholders in the ratio of three new equity shares for every five equity shares held, at a price of Rs 12.50 a share, aggregating Rs 34.43 crore.

The rights issue bid will be opened on February 9. The company will use the amount to pay off its high-interest debt and restructure the entire debt portfolio. The company has a debt of Rs 779 crore.

"In the first nine months of the current fiscal year, GACL has paid off debts of Rs 121 crore. We will repay Rs 40 crore more by the end of the fourth quarter of the current year. With the rights issue, we will restructure the debts further. The issue will also help us improve the net worth and debt-equity ratio of the company," said P K Taneja, managing director of GACL.

During the last fiscal year, GACL paid off Rs 140 crore of debt following an impressive rise in turnover at Rs 1,022.91 crore, which was an increase of Rs 116 crore over the previous year sales of Rs 907.12 crore.

The company also reached a milestone of booking the highest-ever gross profit of Rs 227.02 crore during the last fiscal year, compared to Rs 163.10 crore in the same period of the corresponding year, registering an increase of 39 per cent.

By the end of the third quarter of the current fiscal year, GACL posted a sales of Rs 204.16 crore against Rs 198.62 crore during the same period last fiscal year.

Its net profit increased to Rs 16.04 crore against Rs 3.61 crore reported during the third quarter of the last fiscal year.

"We have also achieved a significant rise in production. The total production for the third quarter ended December 31, 2003, has gone up to 2,65,787 metric tonnes against 2,65,498 metric tonnes in the corresponding period of the previous year. The production for the first nine months has also gone up to 7,74,110 metric tonnes as against 7,61,432 metric tonnes, following higher capacity utilisation of all plants," Taneja said.

The overall quantity of products sold in the third quarter of the current fiscal year is also higher at 1,71,917 metric tonnes as compared to 1,69,681 metric tonnes in the third quarter of the last year.

"We are incurring high expenditure in using naphtha for running plants. Now with the availability of LNG in Gujarat, we are planning to use gas for our captive power plants. This will help us reduce cost by a large amount," Taneja said.

GACL has already initiated talks with the Gas Authority of India Ltd (GAIL), a partner in the Petronet LNG Ltd's 2.5 mmtpa LNG project to be commissioned on February 9.