Balmer Lawrie & Co will seek shareholder-approval to enhance its borrowing limit by Rs 100 crore to Rs 350 crore at the forthcoming annual general meeting. The company also proposes to buy back shares in anticipation of the government's decision to introduce buyback. Both the resolutions will be tabled at the annual general meeting scheduled for September 24.
The company's resolution for buying back of its fully paid shares might result in a decrease in the debt-equity ratio of the company if the debt is not reduced proportionately. This may help improve the intrinsic value of the shares when its book value is much higher than its market value, the management claims in its corporate review 1997-98. Meanwhile, the management is formulating a plan to restructure associate company, Cochin Refineries-Balmer Lawrie.
The management is reviewing the equity structure as the company's performance has been affected due to the adverse market conditions and the steep increase in input costs. The company recently set up a tea packaging and warehousing unit at London. The move was prompted by the company's desire to further consolidate its position for value-added teas in the European markets and increase business volume. The new warehousing unit, which involved an investment of