Super House to issue warrants to fund expansion

Kanpur-based leather major Super House Ltd has decided to issue 903,417 warrants of Rs 45 each on a preferential basis for promoters, to finance the expansion and modernisation of the Safety Footwear unit and to establish a tannery for Bovine Leather.

The warrants are convertible into an equal number of equity shares of Rs 10 (face value) at a premium of Rs 35. Once converted, this will enhance the shareholding of the promoters in the company from 44.86 per cent to 49.60 per cent.

When the warrants are converted, they will yield Rs 4.06 crore. This will finance both the capital expenditure and working capital for the project.

An enabling resolution was passed by the extraordinary general meeting of the company today.

Director Zafar Amin told Business Standard, "We have targeted a turnover of Rs 300 crore, as against about Rs 230 crore achieved last year."

The terms of the issue are: The warrants will be locked in for three years from the date of allotment; these will be convertible at one or more occasions within a period of 17 months and 29 days from the date of allotment of warrants. The warrant holders will not have voting rights.

Among the promoters are Managing Director Mukhtarul Amin, and his family members, as well as the companies floated by the promoters, like Choudhary Overseas Ltd, Nigar Entreprises Ltd and Super House Overseas Ltd.

Earlier the company had issued similar warrants in October 2005. After the conversion of these warrants (700,000) into the same number of equity shares and after the allotment of shares from the present issue, the shareholding of the public will get reduced from 54.66 per cent to 46.32 per cent, that of FIs, corporate bodies and other institutions to 4 per cent from 4.72 per cent and that of NRIs and overseas corporate bodies to 0.08 per cent from 0.10 per cent.

In another move, the company has merged three companies, two of them closely held, Super Garments and Sharp Leathers Ltd, and the public limited firm Super House Ltd (name changed from Super House Leathers to Super House Ltd); 100 shares have been reduced to 50 in the case of Super House (earlier known as Super House Leather), to 17 shares in the case of Super Garments and 33 in the case of Sharp Leathers.