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Our Bureau

New Delhi , April 15

SAMTEL Color Ltd, one of the largest colour picture tube (CPT) manufacturers in the country, has got the approval of its board of directors to make preferential allotment of compulsorily partly convertible debentures aggregating to Rs 50 crore and issuing1.25 million warrants (optionally convertible) to ICICI Ventures.

The initiative to make preferential allotment to ICICI Ventures will help the company further strengthen its financial structure, enabling Samtel to implement its growth strategies effectively, according to Mr Satish Kaura, Chairman and Managing Director, Samtel Color.

The compulsorily partly convertible debentures aggregating to Rs 50 crore will carry a coupon of 7 per cent till the date of conversion.

This will be converted into 58.82 lakh shares on May 15, 2005, at a price computed, based on the audited results of financial year 2005.

The floor price for conversion would be computed as per SEBI guidelines, while the cap is restricted to Rs 85 per share.

The warrants, if opted for conversion, will also be converted at the same price.

Following the issuance/complete conversion of the instruments into fresh shares, the equity capital will increase by 17.58 per cent to Rs 47.68 crore.

ICICI Ventures will hold 14.96 per cent equity stake in Samtel Color, promoter shareholding will be 49.61 per cent, and 35.43 per cent will continue to be held by public shareholders, including institutional, corporate, and individual investors.

The company's board, which met on Wednesday, also gave its approval to implement a project for the manufacture of large size (29-inch) conventional and flat CPTs for televisions at its existing facilities in Ghaziabad. Commenting on these developments, Mr Kaura said, "The approval for a new manufacturing line for higher value, large-size CPTs is in line with our strategy to continuously enrich our product mix and enhance average contribution through high value products."

Further, the new line will also strengthen the company's sectoral position and provide good returns.

According to Mr Kaura, this production line will have a capacity of 1.5 million conventional and true flat CPTs per annum. As a result, Samtel's capacity will increase from 5.3 million units per year to 6.8 million units per year.

The new line will manufacture 29-inch conventional and flat CPTs, and will also have flexibility to manufacture 28-inch CPTs. The company intends to target both domestic and export markets for these products, with Europe being the primary market for exports.

To be completed in around 12 months' time, starting May 2004, at an estimated cost of Rs 95 crore, this new production line will be established alongside the company's existing production line for super flat television tubes at Ghaziabad.

This will help the company implement the project at a low capital cost as it would be in a position to largely leverage its existing facilities and infrastructure for the same, Mr Kaura said.

The company is confident of implementing the large size CPT project well in time. Samtel is acquiring the new production line from the US-based Thomson (RCA) and has contractually ensured that Thomson will send a team of engineers during the commissioning phase, scheduled for April 2005.

More Stories on : Preferential Allotments | Television Sets

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