Arvind Mafatlal firm to float Rs 30 cr rights issue

Polyolefins Rubber Chemicals (PRCL), an Arvind Mafatlal group company, is floating a rights issue to raise Rs 30 crore.

The company is raising funds to part-finance the infusion of Rs 90 crore in Mafatlal Industries Ltd (MIL) as part of a Board for Industrial and Financial Reconstruction (BIFR) order. The balance would be raised through term loans.

As per the BIFR-approved rehabilitation scheme, Mafatlal Industries has been trifurcated into three companies. The chemical division has been demerged into PRCL, various surplus/non productive assets and investments transferred into a special purpose vehicle Sulakshana Securities (SSL) while the textile operations will continue with MIL.

The shareholders of MIL, as on March 3, 2003, received one equity share of PRCL of Rs 10 each fully paid for every equity share of Rs 100 each fully paid-up held in MIL.

PRCL has advanced Rs 1 lakh towards the demerger consideration of SSL for distribution among MIL shareholders.

Thereafter, PRCL would subscribe to equity capital of SSL to the extent of Rs 9 lakh at face value. This will result in SSL becoming a subsidiary of PRCL.

PRCL is engaged in the manufacturing of fluorine-based chemicals and not in polyolefins or rubber chemicals.

The company has already sought shareholders' approval to change the name of the company to Navin Fluorine International.

This is a part of the restructuring exercise initiated by the Arvind Mafatlal Group whose flagship company Mafatlal Industries turned sick.

Recently AMG sold assets and certain liabilities of its petrochemicals business to Sun Bright Cement Agencies, a business associate of Reliance Industries.

MIL will soon close down its textile operations at Lower Parel in Mumbai and Asawara in Ahmedabad permanently while its Mazgaon unit in Mumbai will produce 14s count cotton yarn on job work basis with 10,000 spindels.

Most of the other machinery from these units would be shifted to Nadiad and Navsari in Gujarat. The cost of a voluntary retirement scheme for 2,645 employees of Mumbai is estimated at Rs 84.07 crore of which the first installment of Rs 23.26 crore has already been paid.