Samtel Color sews up pref allotment to ICICI Ventures

Samtel Color, the country's largest colour picture tube (CPT) maker, has finalised the preferential allotment of compulsorily partly convertible debentures amounting to Rs 50 crore, and the issuance of 1.25 million optionally convertible warrants to ICICI Ventures.

The company will invest the money to start a new production line to manufacture large-sized 29-inch CPTs at its Ghaziabad factory. The total cost of the project is estimated to be around Rs 95 crore. The new line will make Samtel the first to manufacture 29-inch CPTs in the country.

The new line, which is expected to be operational from May 2005, will increase Samtel's production capacity from 5.3 million units to 6.8 million units.

Satish Kaura, chairman and managing director, Samtel Color, said, "The preferential allotment to ICICI Ventures will help us further strengthen our financial structure and enable us to implement our growth strategies effectively."

"We will be able to leverage our equity partner's strengths while looking at growth opportunities," he added, indicating that ICICI Ventures may play a vital role in Samtel's future expansion plans.

According to a statement from the company, the compulsory partly convertible debentures will carry a coupon of seven per cent till the date of conversion.

The debentures will be converted into 5.882 million shares on May 15, 2005, at a price based on the financial performance of the company in 2004-05.

After the complete conversion of the debentures into fresh shares, the equity capital of the company will increase by 17.5 per cent to Rs 47.7 crore and ICICI Ventures will hold a 14.96 per cent stake in Samtel.

The proposed new line will also give the company the flexibility to produce 28-inch CPTs.

According to Kaura, globally the market for large and very large sized CPTs is expected to outpace the demand for small and medium-sized CPTs. Besides the domestic market, Samtel would be targeting Europe in a big way for its exports.