Oudh Sugar unveils 3:4 rights

Oudh Sugar Mills Ltd, the K K Birla group firm, announced board clearance for a 3:4 rights issue to fund capacity addition.

The company will offer 77.78 lakh equity shares of Rs 10 each at a premium of Rs 40 per share on a rights basis.

The Oudh share has also benefited from the good run in sugar sector shares. It now hovering at around Rs 140. The scrip touched a 52-week high of Rs 162 on January 5.

The company is hoping to mobilise around Rs 40 crore from the rights issue. The K K Birla group now holds around 56 per cent stake in Oudh.

The company has a paid-up equity capital of Rs 10.4 crore, which would increase to Rs 18 after the rights float.

According to a company official, the fund mobilised through the rights issue will be used primarily for capital expenditure.

Besides, it might be used for repayment of short term & long term loans, augmenting long term working capital resources and general corporate purposes.

The K K Birla group is already investing in the capacity expansion of both its sugar firms, Upper Ganges and Oudh.

C S Nopani, chairman and managing director of Oudh Sugar, earlier informed that the group will invest around Rs 90 crore in the second phase of expansion, taking the new investment of the group in sugar business to Rs 205 crore.

The K K Birla group is now eyeing a combined sugar crushing capacity in excess of 40,000 tonne per day in the next two years.

Nopani said the group will pump in fund to the sugar business to achieve the economies of scale as well as would try to become a key player globally.

The company has already spend Rs 60 crore in phase 1. "We are investing Rs 150 crore in Oudh in a phased manner," he said.