The Hindu Business Line : Rama Newsprint reduces equity capital base

Rama Newsprint and Papers Ltd (RNPL) has initiated the process of reducing its equity capital base by cancellation of Rs 7.50 of every ordinary share of Rs 10 each fully paid up. Simultaneously thereafter, fourfully paid-up shares of Rs 2.50 each shall be consolidated into one equity share of Rs 10 each.

As a result, the subscribed and paid-up equity share capital of the company of Rs 232.63 crore consisting of 23,26,32,129 equity shares of Rs 10 each to be reduced/consolidated to Rs 58.15 crore consisting of 5,81,58,031 equity shares of Rs 10 fully paid up by adjusting the debit balance in the profit and loss account amounting to Rs 64.91 crore as on March 2005 and creating capital reserve of Rs 109.54 crore.

Explaining the reduction of equity capital, the Director of RNPL, Mr Virendra Bangur, said it would make the task of servicing (dividend payout) easier and manageable. The capital structure will also be conducive to future capital expansion and long-term strategy which, in turn, will create value for the existing shareholder, said Mr Bangur.

While stating that the capital structure would be comparable to the prevailing structure in the industry, Mr Bangur said that a special resolution, which was approved by shareholders in December, 2005, had recently been approved by the Ahmedabad High Court. The court order was effective from June 7, 2006.

Sales realisation

He said that the controlling equity stake of RNPL was taken over by the S.K. Bangur Group about two-and-a-half years ago, when the company's sales realisation from each tonne of newsprint was about Rs 18,000. The sales realisation had since increased to about Rs 26,000 a tonne, thanks to various cost-cutting measures and equipment changes. The company's mill near Surat in Gujarat was now running at 100 per cent capacity utilisation.

RNPL plans to double its annual capacity to 2 lakh tonnes of newsprint, based on imported second-hand machine. In fact, three machines in good condition had been identified, of which one would be purchased within the current fiscal. He said that the company would use wastepaper as raw material, and it would import over 40 per cent of the raw material in the future.

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