Berger Paints plans 1:2 bonus issue

Berger Paints yesterday said it will come out with a bonus issue for its existing shareholders in the ratio of one share for every two shares held.

The company board, which met yesterday, approved the bonus issue subject to the consent of the members at an extraordinary general meeting to be held on March 8, 2004.

The share price of Berger Paints rose by Rs 4.40 or 2.35 per cent on the National Stock Exchange even as the Nifty slipped by 1.85 per cent.

The bonus issue plan is in view of the sustained growth in the company's performance in the last several years, a statement from the company said.

Analysts are of the view that the bonus issue will increase the liquidity of the stock on the bourses.

The non-promoters holding in the company is around 34.23 per cent as on December 31, 2003.

Moreover, the issue will significantly boost Berger's equity base and thus its debt-equity ratio will further be improved.

"With a low debt-equity ratio, the company will be in a better position to borrow fresh fund, if required," an analyst noted.

The shareholding pattern of the company shows institutional holding at 8.68 per cent, while public holding is at 25.59 per cent as on December 31, 2003.

The directors also decided to delist the company's shares from the Ahmedabad and Delhi stock exchanges.

Meanwhile, Berger Paints posted a 25.2 per cent jump in its profit after tax (PAT) for the third quarter ending December 31, 2003.