Pennar Profiles (PPL), the Hyderabad-based Pennar group company has deferred the preferential allotment of 57,09,112 equity shares of Rs 10 each at par to two foreign companies, which were being inducted as new joint venture companies.
Company sources said since the proposal could not be implemented within the 90-day time-frame stipulated by Sebi under the guidelines of preferential allotment. The foreign promoter have asked for more time to make the investment decision. Sources said this decision by the foreign company is considering the changed economic circumstances prevailing in South East Asia as well as in the local market.
In September 1997, PPL had proposed to offer majority stake of 51 per cent to a US company through its Mauritius-based subsidiaries View Extrusions Holdings (Mauritius) and New York Metals Co, Mauritius. The company was supposed to bring in both fresh capital and technology. PPL has an equity base of Rs 5.48 crore. After the preferential issue, the holding of the Pennar group chairman and his associates was supposed to come down to 26 per cent as against the present 53 per cent.
The induction of the foreign partner was proposed to enable Pennar to widen the base of its products. The American company would provide technology and dyes that would enable Pennar to offer complete systems in areas like architecture, furniture and irrigation on a turnkey basis. It would also give Pennar the know-how to offer value-added products in areas like automobiles, telecommunication and power engineering. In the last year, the company had commissioned a second press to reach a capacity of 6000 tpa. However, due to the poor market conditions the firm has not been able to utilise this capacity at full strength. Company sources said the benefit of this expansion will be available once the market revives.
Market sources said another reason for the foreign promoter pulling out is the poor performance of the company. For the year-ending March 1997, the company has posted a loss of Rs 1.62 crore. PPL performance is closely linked to the automobile, white goods and construction industries. Since all these industries have been in a bad state for the past one year and are not in a position to revive in the short term, the foreign partner might have thought prudent to enter at a later time.
