Nandan Denim to raise Rs 50 cr through FCWs

To issue fully convertible warrants at Rs 200 per share to Polus Global Fund, an FII

Ahmedabad-based leading denim fabric maker, Nandan Denim Limited (NDL) is set to raise Rs 50 crore by issuing 2.5 million fully convertible warrants (FCWs) to UK-based foreign institutional investor, Polus Global Fund.

As per an official statement by the company, the warrants will be converted into equity shares at Rs 200 per share within 18 months time. "The conversion price of Rs. 200 per share is at over 70 per cent premium to Friday, September 18 closing price of Rs 115.50 per share on BSE and 250 per cent premium to the book value of Rs 57 per share," it stated.

India's second and world's fifth largest integrated denim fabric maker, Nandan Denim will seek shareholders' approval for the preferential allotment at its upcoming Annual General Meeting (AGM) on September 29, 2015.

The UK-based FII currently holds 135,000 shares or 0.30 per cent stake currently in the company, which will increase to 2.63 million shares or 5.48 per cent post conversion of the warrants into equity shares.

"The warrant holder will have to pay an amount equivalent to at least 25 per cent (Rs 12.5 crore) of the consideration on or before the allotment of warrants while balance 75 per cent shall be payable on or before the time of exercise of the warrants (i.e. within 18 months)," Nandan Denim stated in an official communique.

Registered in the Republic of Mauritius and managed by Fidelis Trust & Corporate Services Limited, which has category one global business licence, the Polus Global Fund has made strategic investments in several Indian entities till 31st December 2014 including the likes of Zee Learn Limited, Omaxe Limited, Archies Limited, ERA Infra. Engineering Ltd, Gujarat Apollo Industries Ltd, IDFC Limited, Radico Khaitan Limited, and Tata Global Beverages Limited, among others.

Talking about the move, Deepak Chiripal, CEO, Nandan Denim Ltd. said: "The company is following its well defined charter of growth and we are pleased with the performance so far. A disciplined approach in line with the long term strategy would enable us to further cement our position in the industry. The company will use the fresh funds for its expansion project. Having attained global scale, we now aim to internalise the 'global way of doing business'. We wish to sustain our efforts on our quality and commitment level across the board."

It needs to be mentioned here that Nandan Denim is in the middle of its capex execution with outlay of Rs 612 crore for expansion of denim fabric manufacturing capacity, spinning capacity and shirting capacity. The capex has a requirement of equity funding to the tune of 30 per cent and this equity infusion, coupled with the internal accruals would balance the funding while the external funds have already been tied up.

Earlier, at its board meeting on April 29, 2015, the company approved infusion of capital through issue of convertible warrants to promoter and non promoter group for an amount not exceeding Rs 100 crore for the growth of the company.

"As required under the SEBI (ICDR) Regulations, the allotment of warrants pursuant to the special resolution shall be completed within a period of fifteen days from the date of annual general meeting and on obtaining in-principle approval from the stock exchanges and should be convertible into equity shares on receipt of the entire amount, within a period of 18 months from the date of their allotment," the company stated.