The Hindu Business Line : Ambika Cotton to issue pref shares to UTI venture fund

A VENTURE fund promoted by UTI Asset Management Company has forayed into textiles account by choosing to invest in the Coimbatore-based Ambika Cotton Mills Ltd (ACM), a known name in the premium segment cotton yarn production and exports.

ACM's board of directors early this week decided to issue 8.75 lakh shares to UTI Investment Advisory Services Ltd, trustees of the UTI's venture fund `Ascent India Fund', through preferential issue route. Ambika Cotton will give the preference shares at a premium of Rs 175 per share (of face value of Rs 10 each) and the company stands to mop up Rs 16.18 crore from the preferential issue to buttress its capital base.

To facilitate the preferential share allotment to the UTI, the ACM's board has also decided to raise the company's authorised capital from Rs 5 crore (50 lakh equity shares of Rs 10 each) to Rs 10 crore (one crore equity shares of Rs 10 each).

The Managing Director of the ACM, Mr P.V. Chandran, told Business Line that his company had chosen the preferential issue route for its least cost proposition to strengthen its capital base, which is required to meet company's expansion project. He said an extra-ordinary general meeting of the members of the company has been called on May 14 to seek the shareholders approval for the preferential allotment.

These investments would also result in enhancing the company's turnover from the present Rs 86 crore to Rs 160 crore on completion of the projects. Ambika Cotton is eyeing Europe and the US as emerging markets for its yarn exports.

As per the present shareholding pattern of ACM, of the 50 lakh equity shares, the promoters and their close relatives/associates hold 34.51 lakh shares or close to 70 per cent, while the institutions including banks/FIs and the public hold another 14.81 lakh shares or 30 per cent.

The post-preferential allotment will consequently see dilution in the promoters holding in the company by 10 per cent.

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