The company had issued 3,65,100 convertible warrants to the promoters which were to be converted at a fixed price of Rs 157.
At present, IP Rings stock is available at Rs 130, which is a 20 per cent discount to its offer price. This would help in boosting the stock discounting.
In a scenario where there is a large cross-section of dubious promoters that are only waiting to take the investors for a ride, this action by the IP Ring management comes as a breath of fresh air.
The move also suggests that the future of the company is in safe hands.
As against a time frame of 18 months from the date of the issue, the IP Rings management has converted their warrants within a short period of 9 months.
Apart from this, due to the conversion, the company would also get around Rs 6 crore. These additional funds would help the company to implement its ongoing projects. As such the availability of funds at the right time would also reduce its interest burden.
IP Rings plans to manufacture SG and cast iron rings which would enable the company to raise its production capacity to 50 lakh rings per annum.
The company has already implemented the project for manufacturing Nifflex-S type, three-piece oil rings in collaboration with Nippon Piston Rings of Japan.Financial performance, however, has been not impressive during 1995-96. For the year ended March, 1996, profit margins of the company has been under pressure.
While the net sales recorded a jump of 39 per cent to Rs 28.96 crore, profit at the operational level increased only by 18 per cent, in turn affecting the profit margins.
Operating profit margins have declined from 39 per cent to 33 per cent. Rising input costs have been the major reason for this. Margins at the net level have also declined but at a slower pace mainly due to higher other income portion which jumped from Rs .16 crore to Rs .76 crore. Also, an increasing level of inventories and sundry debtors are some factors to worry.
