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Lack of investor demand has forced textile firm Scotts Garments to extend its initial public offering (IPO) till May 3 and lower its price band by nearly 10 per cent. The 10.5-million-share offering, which was supposed to close on Monday, managed to garner just 25 per cent subscription.
The company has lowered the price band from Rs 130 to Rs 132 a share to Rs 118 and Rs 120. Scotts will now raise anywhere between Rs 124 crore and Rs 126 crore. The investment banker handling the issue said it was hopeful the issue would go through with the lowered price band.
The company plans to use the IPO proceeds to finance a portion of the cost of setting up a unit for making trousers at Doddaballapur, Karnataka, and a knitting-and-fabric-processing unit at Kagal-Kolhapur, Maharashtra.
Some of the capital wouold also be used to meet margin money for working capital of the new units, for general corporate purposes and to meet issue expenses, according to the company’s offer documents.
Rating agency CARE has given it an IPO grade of 3, indicating average fundamentals, according to the company’s offer documents.
Canbank Venture Capital Fund picked up 1.74 million shares at Rs 115 a share in a pre-IPO placement. Keynote Corporate Services and Canara Bank Merchant Banking Division are the merchant bankers for the issue.
