Calsoft announces rights issue

Offers seven rights shares for every 10 existing equity shares

California Software Company Ltd (Calsoft) announced on Monday its rights issue to raise Rs 22.73 crore by offering seven rights shares for every 10 existing equity shares to fund its growth and expansion needs.

The company will be issuing 34,44,762 equity shares of Rs 10 each for cash at a premium of Rs 56 per share. The issue opens on April 26 and closes on May 25.

The objectives of the rights issue are to meet the capital expenditure required for expansion of offshore development centres, meet the enhanced working capital requirements, and invest in the capital of the existing subsidiaries to fund their expansion and capital needs.

Addressing a press conference, J K Nair, executive vice-president and chief operating officer, Calsoft, said the total fund requirement for its proposals would be Rs 25.45 crore.

To fund the expenditure, the company will be raising Rs 22.73 crore through this rights issue. While the company has been sanctioned a working capital loan of Rs 2 crore by Canara Bank, it will fund Rs 71 lakh through internal accruals.

Calsoft will spend about Rs 7 crore for expansion of its offshore facilities in Chennai. The company will be adding 25,000 sq ft facility with a seating capacity for 250 professionals over the next 12 months. It has already finalised 12,600 sq ft of space and is in the process of adding another 12,000 sq ft.

The company will invest Rs 14 crore in its wholly-owned subsidiaries CSWL Inc and WebSpectrum Software Ltd to fund expansion and repay the existing debts.

Sam Santhosh, managing director and chief executive officer, Calsoft, said the company would be focusing on recession proof and growing vertical segments like healthcare and education in the near future. Its future acquisition would also focus on strengthening its offerings in these two verticals, he added.

While the company will pursue a combination of organic and inorganic growth, the acquisitions will focus on bridging the gaps in its offerings.

With an employee strength of over 430, Calsoft operates in three business segments "" commodity solutions, enterprise solutions and technology solutions.

The company reported a consolidated revenue of Rs 79.40 crore for the nine months ended December 31, 2005, and earned a profit of Rs 4.93 crore.