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R.Y. Narayanan

A company source said SGL had invested more than Rs 100 crore in expanding its production capacity.

Coimbatore , Sept. 26

SHANTHI Gears Ltd (SGL) has decided to float a Foreign Currency Convertible Bond (FCCB) issue up to Rs 70 crore to fund its expansion plans.

The company has also decided to hike the investment limit for NRIs from the existing 10 per cent of the share capital to 24 per cent and the FII investment limit from 24 per cent to 40 per cent.

A company source told Business Line today that SGL had invested more than Rs 100 crore in the past three to four years in expanding its production capacity and this money was raised through internal accruals and borrowings from financial institutions. This year, the company has chosen to take the FCCB route to fund its expansion plans and has given the mandate to SBI Capital Markets.

On the likely impact of the proposed expansion plans on the company's topline, the source explained that during 2004-05, SGL's net sales was Rs 121.24 crore and the net profit was Rs 19.12 crore. In the first quarter of the current fiscal, net sales was Rs 33.68 crore and the net profit was Rs 5.58 crore. During the full year, he expected the turnover to be around Rs 160 crore-Rs 165 crore and it might cross Rs 200 crore in 2006-07.

In a communication to the NSE, Shanthi Gears Ltd has said that an EGM of the shareholders held on September 23 approved the proposals to increase the borrowing power of the Board of Directors from Rs 100 crore to Rs 250 crore, to issue FCCB securities up to Rs 70 crore for funding expansion, to increase the investments limits by NRIs from 10 per cent to 24 per cent and by FIIs from 24 per cent to 40 per cent of the equity capital.

According to the company, for the quarter ending June 30, 2005, the share of the Indian promoters and persons acting in concert was 47 per cent of the equity capital that was Rs 7.80 crore.

The share of FIIs in the equity was 0.39 per cent and that of NRIs/OCBs was 1.71 per cent.

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