The Hindu Business Line : DIC India plans Rs 52-cr capital expenditure

Where & how
It has proposed a rights issue within a price band of Rs 210-230 per equity share
Some 50% of the capex would go towards the new plant in Noida

Kolkata May 31 DIC India Ltd (formerly Coates of India), 65.76 per cent held by the $10-billion Dainippon Inks and Chemicals of Japan, has chalked out a capital expenditure of Rs 52 crore on modernisation of all its existing printing ink units in the next three years.

The company, to meet this and also for working capital requirements, has proposed a rights issue within a price band of Rs 210-230 per equity share (including premium) in the ratio of one equity share for every three held by existing shareholders, to mop up some Rs 50 crore.

Under-subscribed portion, if any, will be picked up by the promoter group (DIC of Japan) in addition to their entitlement, as per prescribed SEBI norms.

Talking to Business Line after the company's 59th annual general meeting here , Dr P.K. Dutt, Managing Director, now appointed as also Chairman of the company, said some 50 per cent of the capex would go towards the new liquid ink manufacturing plant in Noida, said to be only the second modern printing inks unit of its kind East of the Suez.

Ahmedabad SEZ

Asked on the proposed new plant by the parent Group at the Ahmedabad SEZ, he said promoters were expected to firm up their proposal within the next few months.

"This, however, indicates their renewed interest in India vis-à-vis China for future investments in the business of Graphic Arts products, and that is a big comfort factor for us."

Pointing out that the company was poised to grow the Lamination Adhesives business launched last May in a big way this fiscal (calendar year) owing to strong support from DIC of Japan, Dr Dutt said this was the area of future growth for the company.

Asked on the total capacity that would be added post modernisation-expansion plans, he said DIC builds its capacities on the basis of a modular system, so that inventories do not go out of control.

Earlier, responding to shareholders' queries on the high premium fixed for the rights shares, he said according to the board members, the price of such an issue should reflect the "intrinsic value of the company taken as one reflecting the future business potential".

On suggestion by a shareholder that DIC Coatings India Ltd, a wholly owned subsidiary of the company, be merged with the flagship, he said the issue was being examined by the board.

Rohit (Printing Inks and Paints) Industries Pvt Ltd, another 100 per cent subsidiary, is now in the process of merger with DIC India, subject to approval by shareholders and other statutory authorities.

Net sales

DIC India's net sales during 2006 increased by 22 per cent, from Rs 278.55 crore in 2005 to Rs 339.49 crore in 2006, with operating profits up 15 per cent despite a sharp increase in raw material costs owing to high price of petro-based inputs.

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