Financial Daily from THE HINDU group of publications
Wednesday, Nov 19, 2003
Financial Daily from THE HINDU group of publications Wednesday, Nov 19, 2003 |
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Corporate
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Announcements TIDCO may not pump in fresh equity into Titan
Abhrajit Gangopadhyay
Bangalore , Nov. 18 THE Tamil Nadu Industrial Development Corporation (TIDCO)has indicated that it is unlikely to pump in more equity into Titan Industries Ltd. TIDCO is the single largest shareholder with 27.88 per cent stake in the watchmaker. Titan plans to infuse additional equity in the next calendar year and had earlier said the fresh equity funding would come from the promoters, Tata and TIDCO, so as to keep their holdings unchanged. Currently, Titan's paid-up equity capital stands at Rs 42.48 crore and preference share capital at Rs 40 crore. Titan had been toying with the idea of additional capital infusion for sometime now in a bid to improve its staggering debt-equity ratio. Top Titan sources also hinted at TIDCO's lack of interest to participate in the next round of equity injection. Earlier, they indicated that TIDCO was not keen on pumping in more money, which was perhaps the reason for the inordinate delay in finalising the equity expansion plan. The sources added that there were foreign funds, which could infuse funds even though the management has not considered the matter till date. The latest development involving the likelihood of TIDCO rejecting plans for fresh equity could throw up new vistas in this regard. However, TIDCO sources ruled out the possibility of offloading its stake in the near future through the new equity inflow corridor. "We have not thought of exiting the company yet," they said. The investment arm of the Tamil Nadu Government is not likely to offer its shares to any third party such as foreign funds at a favourable price in the near term, the sources added. It can be mentioned that foreign funds such as Morgan Stanley and IFC hold equity in Titan. The company had Rs 467.05 crore of debts on its books as on March-end 2003. Controlling the debts has been a challenge for the company but cost control and drive towards increased productivity has helped boost efficiency, the officials said. However, Titan has not firmed up a plan to retire high-cost debts through refinancing tracking the prevailing low interest rate regime. Meanwhile, Titan expects to sell close to seven million watches in the current financial year, up from the 5.6 million units it sold last year. The cheaper sub-brand Sonata is likely to be the volume driver, but top-end sub-brands, such as Nebula, were also showing greater traction in value growth. According to a business plan authored by consultancy major McKinsey, Titan is likely to double its sales to Rs 1,500 crore by 2006-07 while net profit is seen to quadruple from last year's Rs 6.21 crore. The growth is likely to driven by better-cost management and newer revenue streams. The company recently entered the eyewear segment and plans to enter the accessories market.
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