Birla Optical Plans Preference Shares

The Priyamvada Birla-controlled Birla Ericsson Optical Ltd plans to increase its authorised share capital to Rs 50 crore through private placement of preference shares.

The increased share capital will enable the company to meet its capital expenditure and working capital requirement including sale of its products on deferred payment basis to the Department of Telecommunications (DoT).

The company proposes to make a private placement of up to 1.5 crore preference shares of Rs 10 each, which may be redeemable and may carry fixed cumulative dividends, to enhance its authorised share capital by Rs 15 crore from the present Rs 35 crore. The company intends to seek shareholders approval at the forthcoming annual general meeting to offer preference shares, and divide the companys authorised share capital into equity shares and redeemable preference shares.

 

During the last financial year, the sales turnover of Birla Ericsson Optical dipped to Rs 92.03 crore against Rs 96.06 crore in 1995-96. According to the companys annual report for 1996-97, the telecom cable market has become extremely competitive due to stagnating growth and overcapacity. This has led to a virtual price war between competitors for jelly filled telephone cables and optical fibre cable.

Gross profit during the period under review increased from Rs 6.02 crore to Rs 9.48 crore.

Net profit stood at Rs 2.75 crore against Rs 1.61 crore the previous fiscal.

To overcome the low demand situation, the company is exploring export markets, and has taken steps to increase its share in the optical fibre cable sector such as railways, oil and gas, power projects as well as local area networks.