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C. Raja Rajeshwari

SHAREHOLDERS of TCM can stay away from the rights offer. The company's financial position is weak (five consecutive years of losses) and the rights issue price of Rs 10 is higher than the current market price of Rs 4.30.

The 1:1 rights offer for Rs 3.4 crore is for funding its working capital gap (Rs 2 crore) and the proposed compensation scheme to be offered at the Kalamassery unit of the company (Rs 1.3 crore). TCM produces power-intensive chlorates, fungicides, weedicides, and barium and strontium chemicals.

Owing to a fall in the prices of chlorate, steep increase in power tariffs and cheaper imports, the Kalamassery factory in Kerala is on the verge of closure.

Declining exports have taken a toll on the company's profitability. In the absence of profits for the past three years, the issue price (Rs 10) pales in comparison with its book value (Rs 5.04).

In this backdrop, shareholders can stay away from the offer. The issue closes on September 27.

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