Ig Petro Gets Nod To Buy Back Shares

IG Petrochemicals shareholders recently passed a resolution permitting the company to buy back its own shares from the market or by public offer. However, a limit of 50,00,000 shares of Rs 10 each has been provided on the net purchased shares in stock at any time.

A company official said the move will enable IGP to purchase shares if the scrip falls below the book value of Rs 48 per share. IGP got the share buy-back approval in anticipation of an amendment to section 77 and other applicable provisions of the Companies Act, which will enable companies to buy back their own shares.

 

The Rs 145-crore IGP makes phthalic anhydride, used by plastic and paints manufacturers. Meanwhile, a private company, Blue Circle Fine Chem, has been permitted to pick up a small stake in IGP. In return IGP will purchase Blue Fines land and fixed assets.

IGP had purchased land valued at Rs 28 lakh from Blue Circle. IGP officials said the land could be used later for construction of a new plant, details of which will be finalised after the returns from the investment in the expansion at Taloja stabilise. The company will issue one lakh shares of Rs 10 each to Blue Fine as consideration for the assets purchased.

Out of the total IGP equity of 2.6 crore shares, the stake works out to less than one per cent. Blue Circle, not being a manufacturing company, had only storage facilities at the site sold to IGP.

The company has also increased its borrowing limits to Rs 500 crore from Rs 300 crore earlier. IGP also sought approval for a $7.85 million foreign currency loan from SCICI and ICICI, a Rs 7-crore rupee term loan from LIC and a Rs 12.5-crore foreign currency deferred payment guarantee from UTI Bank. These will be secured on a mortgage or as a charge on the movable or immovable properties of the company.

The company is expanding the capacity of its phthalic anhydride plant at Taloja from 45,000 tonnes per annum (tpa) to 1,10,000 tpa. The project cost is estimated at Rs 148 crore, with Rs 102 crore being funded by term loans and Rs 46 crore from internal accruals.