The Hindu Business Line : Sheths hike stake in Gemini Communication

The BSE Small Cap Index component Gemini Communication will see a change in paid-up capital, share premium reserves and shareholding pattern during the current financial year against last fiscal as a result of conversion of warrants and strategic investment.

Sheths, the promoter family (also the entities controlled by it) of Great Eastern Shipping, have increased their stake in the company through warrant conversion as well as market purchases to 13 per cent from 4.10 per cent as of March 31, 2007.

The promoters of Gemini have also increased their stake already through warrant conversion and, by end of November 2007, when residual 1 lakh warrants held by the promoters are to be converted, their holding would go up to 38 per cent from 37.6 per cent.

The paid-up capital has already risen to owning to conversion of warrant Rs 4.83 crore at the end of the June 2007 quarter against Rs 4.38 crore in the March 2007 quarter. But the bonus issue, effective from today, is inflating the capital base to Rs 9.7 crore and would take it to around Rs 10 crore in November after warrant conversion.

But the 1:1 bonus issue would not have any effect on the percentage of holding of the existing shareholders including that of Sheths. From sources close to the development, it is understood the Sheths may raise the stake close to 15 per cent through further market purchases, but unlikely to cross the percentage threshold so that it triggers take over rules for 20 per cent open offer.

Partners in growth

Mr R. Vijaykumar, promoter Chairman of the company, told Business Line that Sheths are partners in growth. He indicated that there was theoretical synergistic compatibility too in the area of shipping IT, which could be exploited as business propositions. However, Mr Vijaykumar clarified that no such proposals were at hand now.

DSP Merrill Lynch’s long to medium term proprietary investment in Gemini’s FCCBs recently is the second non-promoter capital support. After conversion, this would take global investors’ stake to 14 per cent of the enlarged capital. Mr Vijaykumar said the company’s currently envisioned fund raising plan for expansion would be over after the bond conversion fetching it a total Rs 97 crore.

new contracts

Gemini is currently eyeing installation and maintenance contracts of IT infrastructure (including hardware, networking and system software) for ICT education project and four statewide area network (SWAN) projects in Tamil Nadu. The State Government is expected float tenders for such projects, worth around Rs 500 crore this fiscal. It has already bagged a few orders through competitive bidding from Tamil Nadu and Punjab agencies. Earlier this month, it obtained one ICT education project in Gujarat worth Rs 30 crore, the Gemini Chairman confirmed.

The stock today closed at Rs 208, a drop of 4.48 per cent over the previous day’s close.