Aktiebolaget SKF, the Swedish parent of SKF Bearings India Ltd, has sought government approval to increase its shareholding in the Indian subsidiary to a maximum of 76.6 per cent from the existing 51 per cent in case a proposed rights issue remains partially unsubscribed.
Sources said the company had submitted an application with the Foreign Investment Promotion Board (FIPB) in this regard last week which will be considered by the board this week.
Executives of the company, however, said they expected the rights issue to be fully subscribed to maintain the existing shareholding pattern in the company.
Torsten Nordgren, managing director of SKF Bearings India, said the FIPB application was only a safeguard against any eventuality. "The proposal is purely a formality, nothing else," he added. On October 3, SKF Bearing India announced details of capital restructuring via a rights issue.
The issue of equity shares and non-convertible debentures (NCDs) with detachable warrants would result in an inflow of about Rs 88 crore.
The proposal is to make a simultaneous, but unlinked, offer of rights shares aggregating to Rs 50.3 crore and non-convertible debentures aggregating to Rs 37.7 crore. The rights shares will be priced at a premium of Rs 15 per share of Rs 10 each. The face value of the company's share of Rs 100 is proposed to be divided into 10 shares of Rs 10 each. Four equity shares will be issued for every five equity shares held.
The equity shareholders will also be issued NCDs of Rs 500 each with detachable warants on a rights basis in the ratio of three NCDs for every 100 existing equity shares. This would result in a total infusion of Rs 37.72 crore.
The company has over the past three years invested over Rs 131 crore in fixed asset creation and also spent Rs 66 crore towards voluntary retirement schemes. This expenditure of nearly Rs 200 crore had been funded by a mix of borrowings and internal accruals. The proposed infusion of equity will held SKF Bearings India to partly retire the high cost borrowings.
In the paid-up equity capital of the company, the parent holds 51 per cent, financial institutions hold around 13 per cent and the Tatas around 3.3 per cent. The balance is held by the public.
