Nandan Denim to raise Rs 100 cr via convertible warrants to fund expansion

Company plans to issue 5 million convertible warrants at Rs 200 each to foreign investors

Ahmedabad-based Nandan Denim Limited (NDL), which is aiming to become Asia's largest denim fabric manufacturer, is planning to raise Rs 100 crore from foreign investors to finance its expansion plans. The denim player is planning to issue 5 million convertible warrants on preferential basis to foreign investors at Rs 200 each including premium of Rs 190.

Considering the continuous increase in the holding of FIIs / FPIs and various advantages in attracting institutional investors, Nandan Denim has proposed to increase the aggregate limit for holding shares by the FIIs / FPIs to 49 per cent from 24 per cent.

Apart from growth plans, NDL expects to fund investment in proposed subsidiary/ies, meet long term working capital requirement and improve capital structure. Nandan Denim received shareholders approval for the same at its Annual General Meeting (AGM) held on Wednesday, September 28, 2016, the company informed in a statement.

On Wednesday, NDL stated that the company will be issuing 2.5 million fully convertible warrants each to Foreign Portfolio Investors, LTS Investment Fund Ltd and LGOF Global Opportunities Ltd at Rs 200 each. LTS Investment Fund Ltd currently holds 1.16 million shares (2.42 per cent) which post issue will increase to 3.66 million shares (6.91 per cent).

The warrant holders shall be entitled to convert the warrants into equal number of equity shares of face value of Rs 10 each, on receipt of entire amount in one or more tranches, within a period of 18 months from the date of the allotment.

"The company has the strategic vision of emerging as a global leader in the textile industry. For this, the company requires the infusion of the additional funds. The proceeds will be utilised to augment the net worth and the capital base of the company required for its business growth; to infuse the funds to the existing or proposed subsidiaries; to meet the long term working capital requirement of the company; to improve the capital structure of the company and for general corporate purposes," said Deepak Chiripal, CEO, Nandan Denim Ltd.

As per NDL, the conversion price of Rs. 200 per share represents premium of over 57 per cent to current share price of Rs 127.05 per share as on Tuesday, September 27, 2016.

This will be the second warrant issue by Nandan Denim Ltd. In September 2015, the company had issued 2.5 million convertible warrants to FII namely Polus Global Fund which has been converted in to equity shares at Rs 200 per share upon receipt of Rs 50 crore towards the consideration.

As of June 2016, FII & FPI held 11.02 per cent in the company while promoter group holding is 58.27 per cent. Post issue of the 5 million warrant, holding of FII & FPIs will increase to 19.70 per cent and promoter holding will come down at 52.78 per cent.

For the fiscal year 2015-16, Nandan Denim Ltd posted a net profit of Rs 63.32 crore on net sales of Rs 1156.72 crore. The company is investing in all Rs 612 crore for its capacity expansion plans.