Balrampur Chini offers 12:100 rights issue at Rs 260/share

Balrampur Chini Mills Ltd (BCML), the country's largest sugar maker, announced a 12:100 rights issue following posting a massive 254 per cent growth in net profit over a 50 per cent rise in sales in the third quarter of the current year.

Priced at a premium of Rs 250 a share, the issue will offer 22.76 lakh equity shares to shareholders in the ratio of 12 shares for every 100 held. The offer will raise Rs 59.13 crore.

A top BCML official said the rights proceeds would be utilised to part finance the long term working capital as well as improving the debt-equity ratio. The company needs working capital of at least Rs 275 crore at any point of time.

"Over the past two years, the company has invested Rs 250 crore to increase its capacity. A sizable part of the capital requirement was borrowed as debts. The debt-equity ratio, at the end of March 2004, will be 0.9:1, " he said.

He added that the pricing of the rights issue was based on the market rate of the stock. The BCML stock has been hovering around Rs 270 for quite some time.

The company's net profit, during the third quarter, went up to Rs 10.28 crore from Rs 2.90 crore in the corresponding period of the last year. Sales grew to Rs 242.42 crore from Rs 161 crore.

The official said the improved performance during the third quarter was due to increase in capacity, thanks to commission of integrated sugar complex.

The company managed to save power cost substantially due to setting up a power plant at the new plant. BCML has a capacity of 29,000 tonnes crushed a day (tcd).

The integrated sugar mill was set up at Haidergarh in Uttar Pradesh for an investment of Rs 130 crore. BCML had taken a $ 15 million (approximately Rs 75 crore) loan from IFC, Washington at 5.75 per cent for a 7-year repayment period.

The other institutions advanced loan for the project included HDFC (Rs 30 crore) and State Bank of India (Rs 20 crore). The project has a sugar plant of 4,000 tcd and bagasse-based cogeneration power plant of 20 MW capacity.