The Hindu Business Line : Orient Paper gets nod for rights issue

Kolkata May 7 SEBI has approved Orient Paper and Industries' draft rights issue proposal. Mr M.L. Pachisia, MD, told Business Line that the price and the ratio were being worked out after the recent receipt of regulator's nod.

ICICI Securities has been hired as the merchant banker to the issue.

"By end of this month the preparatory exercise would be over and the issue is likely to open next month. By the end of July, the issue should be through," he added.

The Orient Paper stock is currently trading at Rs 475, up around 23 per cent in the past one month. The company board on October 5, 2006 had proposed to issue equity shares on rights basis for a total of Rs 175 crore.

The current paid-up capital of the GP-CK Birla Group company stands at Rs 14.84 crore and the reserves is at Rs 128.49 crore. The promoters, including persons acting in concert (PAC), now hold 31.68 per cent in the company, up from 29.89 per cent on March 31, 2006. The increase primarily owing to open market purchases by Central India Industries, a PAC.

Moreover, the combined holding of the Group's six educational and medical institutions is another 10.57 per cent. The rights issue is expected to increase the promoter group's stake further to a height that could be reasonably considered unassailable for a predator.

Mr Pachisia said the rights issue was not meant to facilitate promoters to increase their holdings, but the promoters were ready to pick up that part of the issue, which might remain un-subscribed.

Carbon credit

Orient Paper would soon begin trading of carbon credits generated by its cement units - one in Andhra Pradesh and the other in Maharashtra.

The carbon emission reduction project of the cement division has received final approval from the United Nations Framework Convention of Climatic Change (UNFCCC) and the company received the first instalment of credits for 96,310 units of certified emission reduction (CER).

"Negotiations are on with a few accredited exchanges; we expect to clinch the first deal during the quarter to June 30, 2007.

The company has already estimated realisable value from the accumulated CER units (at a price of 12 euro per unit) at Rs 6.42 crore and booked it as an income in its 2006-07 accounts.

From 2007-08, the cement division is anticipated to generate 80,000 units of CER till 2011-12.

The paper division has also initiated steps to earn CER. However, it would take another couple of years to reach the stage of trading.

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