The Hindu Business Line : Gujarat Alkalies announces 3:5 rights

AS part of its financial restructuring programme, Gujarat Alkalies and Chemicals Ltd (GACL), India's largest producer of caustic soda, has announced a rights issue for its shareholders in the ratio of three equity shares for every five shares held at a price of Rs 12.50 per share, aggregating Rs 34.43 crore.

The issue will open from February 9 and close on March 10. The rights offer is expected to help improve the company's total networth and debt-equity ratio.

Mr P.K. Taneja, Managing Director, told press persons here on Thursday that the company's present debt equity ratio has improved to 2.36 in the wake of the upturn in market sentiments.

"We have been able to repay debt to the tune of Rs 121 crore in the first nine months of the current fiscal and we expect to repay a total debt of Rs 150 crore by the end of the fiscal. As on February 1, our debt was to the tune of Rs 700 crore on a equity of Rs 319 crore," he said.

While different organisations of the Gujarat Government owns about 35 per cent stake in the company, financial institutions and insurance companies own 18.15 per cent, banks/ mutual funds 6.78 per cent and the general public 39.34 per cent.

Besides caustic soda, the company produces a host of value-added products like sodium cyanide, chloromethanes, phosphoric acid, hydrogen peroxide, chlorine, concentrated hydrochloric acid and potassium carbonate.

Having experienced a sluggish market for five years, the company's fortunes began to turn since last fiscal, when its total sales breached the Rs 1,000 crore-mark to touch Rs 1,022.91 crore, registering a 13 per cent increase.

Mr Taneja said the company's total production for the first nine months of the current fiscal had gone up to 7.74 lakh tonnes, with the third quarter income being Rs 249.42 crore. The gross profit before interest, depreciation and taxation for the third quarter increased to Rs 65.19 crore from Rs 52.77 crore for the corresponding period of last fiscal.

According to him, the company had priced the premium of its rights issue at a low Rs 2.50 per share (its scrip is hovering between Rs 40 and Rs 45 each at present), as "we have not been able to pay dividends to our shareholders for the last five years." The rights issue, he said, was "our way to thank our shareholders for staying with us and seeing us through difficult times."

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