Shriram Pistons To Issue Rs 10cr Pref Shares To Riken

Charat Bharat Ram-controlled Shriram Pistons and Rings (SPR) proposes to issue preference shares worth Rs 10 crore to Riken Corporation of Japan, its technical collaborator for the manufacture of piston rings.

The company has recently applied to the government seeking approval for issuing the preference shares to be fully subscribed by Riken Corporation which will be redeemable in the fifth, sixth and the seventh years in three equal instalments and will be carrying a dividend of 13 per cent. The preference issue will be used to part finance a Rs 45 crore expansion programme, at the end of which the companys capacity to manufacture piston rings is expected to increase by 50 per cent to 2.1 million piston rings per month. SPR currently manufactures 1.4 million piston rings every month.The rest of the funds amounting about Rs 35 crore is proposed to be raised through debt and internal accruals.

Riken Corporation, the worlds largest manufacturer of piston rings, has a 15 per cent stake in the company, while the majority stake of 51 per cent is held by various Shriram group companies controlled by Charat Bharat Ram. The total equity base of the company is Rs 5.57 crore.

The company made a gross profit (after interest but before depreciation) of over Rs 23 crore in the previous fiscal which ended on March 31 1997, while net profit crossed Rs 10 and total turnover reached Rs 150 crore last year.