The board of appliances major Singer India will meet on December 13 to consider a rights issue. The company is planning to utilise the proceeds for its working capital. Company officials said the issue is likely to be around 1:1.
At present, Singer has a Rs 8 crore capital base. If the rights issue is 1:1 then the capital base will go up to Rs 16 crore, Singer executives said. The board will take a final decision on the price and ratio at its meeting, executives said.
Singer NV of Netherlands, the promoters, will subscribe to the entire issue in the wake of a poor response from shareholders.
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Singer BV holds 51 per cent in Singer India, while National Small Industries Corporation, a state-run enterprise, holds 26 per cent and the remaining is held by public and others. The Singer stock on Thursday closed at Rs 11.87 on the Bombay Stock Exchange.
The company's turnover has taken a beating in the last year due to poor demand for consumer durables. During 2000-01, the company posted a net profit of Rs 39.9 lakh against Rs 51 lakh in the previous year. The profitability was impacted by lower turnover at Rs 128.94 crore during the year compared with Rs 134.37 crore in the previous year.
Singer, one of the leading players in sewing business, also saw its business from the segment declining in the past year. However, the company's export business grew by 26 per cent.
The US bankruptcy court had earlier approved the voluntary plan of reorganisation filed under Chapter 11 of the US bankruptcy court by The Singer Company BC, the major indirect shareholder of Singer India.