The Hindu Business Line : Emami files `red herring' prospectus for public issue

EMAMI Ltd, a member of the Rs 600-crore Emami Group, has filed a draft `red herring' prospectus with the Securities and Exchange Board of India for its forthcoming public issue of 50,00,000 lakh shares of Rs 2 each for cash.

According to an official release by the company here on Wednesday, the issue price will be discovered through a 100-per cent book-building process. Some 5,00,000 shares are being reserved for the employees of Emami Ltd. Anand Rathi Securities Pvt Ltd and ICICI Securities Ltd have been appointed as the book-running lead managers for the issue.

Emami has interests in personal and healthcare products, paper, writing instruments, retailing, hospitals and software services,

The Emami stock is listed on the BSE, and following the fresh issue, it will be listed in both the BSE and the CSE.

According to market sources, the company, which filed the preliminary prospectus (known as red herring in market parlance, as some portions are likely to change in the final prospectus) on December 28, will now have to wait for the mandatory 21 days, or a maximum of 30 days, for receiving the SEBI clearance, after which it will set in motion the issue process. Analysts said if one were to go by the price at which Emami stock was now being traded in the BSE (around Rs 80), the issue size may come to around Rs 41 crore. The 52-week high for the stock is placed at Rs 101.

Company officials declined to comment on the issue price at this stage, as it would be in contravention of SEBI Rules.

Emami, in the current fiscal, had split the face value of its share from Rs 10 to Rs 2 to facilitate potential investors. Incidentally, the company had also declared a 1:1 bonus sometime ago.

According to analysts, the book process will throw up the record maintained by, say, a specialist of buy and sell orders in a given stock, providing the preliminary indication of interest among prospective investors. Hence, the 100-per cent price discovery to be achieved through the book-building process, it is pointed out.

Sources said Emami, as a manufacturer of personal and healthcare products, with its Boroplus alone being cited as a Rs 100-crore brand in the market today, was keen on acquiring brands, both international and domestic, to stay ahead of competition.

The company, in 2003-04, recorded a total income of Rs 216.81 crore, with a PAT of Rs 21.67 crore. For the half-year ended September 30, it notched up a turnover of Rs 85.75 crore and a PAT of Rs 9.83 crore.

Sources said sales hit a peak during December-March, as Emami has a range of personal and healthcare products specifically tailored for the winter season.

The company now leads the corporate race with 17 celebrity ambassadors, led by the Big B. Marketing experts said the company has adopted the celebrity-endorsement route for building successful brands.