Maha Glass Plans Rights Float To Raise Rs 19.5 Cr
Beleaguered laminated safety glass manufacturer Maharashtra Glass & Agro Ltd plans to come out with a rights issue to raise Rs 19.5 crore.
The float is likely to be in the ratio of 3:2 consisting of 1.95 crore equity shares at par value.
The proceeds of the issue will be used mainly to retire the company's high-cost debt which stands around Rs 22 crore. In 1997-98, Maharashtra Glass paid Rs 5.01 crore as interest for its debt, as against Rs 3.97 crore in the previous year.
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The average cost of funds for Maharashtra Glass works out to around 21 per cent.
The move to raise the capital of Maharashtra Glass has come at a critical juncture as it has become a potentially sick company with accumulated losses of over Rs 17 crore. And since the losses are more than 50 per cent of the peak net worth of the preceding four years, the management of the company is likely to report itself to the BIFR. The rights issue will increase the company's paid-up capital from the existing Rs 11.32 crore to Rs 30.82 crore, post-rights. On a total turnover of Rs 25.88 crore in fiscal 1997-98 (Rs 23.46 crore in the previous year), Maharashtra Glass posted a net loss of Rs 8.43 crore (Rs 9.83 crore net loss in the previous year).
Gross loss was at Rs 6.51 crore in 1997-98 as against a gross loss of Rs 8.21 crore in the previous year. The other factors which contributed to the heavy losses is under-utilisation of its Chakan plant near Pune coupled with the recession in the automobile industry. Sekurit Saint Gobain SA, the $14 billion French conglomerate, recently picked up a total 54.43 per cent equity in Maharashtra Glass through preferential allotment.
Sources say the management has decided to develop laminated safety glass products to meet the requirements of auto majors. Since its takeover by Saint Gobain in December 1997 from Indian promoters, the French company has inducted professional management and deputed technical experts at the Pune plant to turnaround the company.