Kolkata, June 25
SPEEDY revival of the ailing Orissa-based Mangalam Timber Products Ltd has prompted the company management to revoke its earlier decision of share capital reduction.
At its meeting on June 29, the board of directors would be considering to pass a resolution seeking shareholders' approval for cancellation of the earlier one seeking reduction in the share capital.
The share capital reduction proposal was passed at an extraordinary general meeting on December 13, 2004. It was decided that the paid-up capital would be reduced from Rs 18.32 crore to Rs 7 crore, by reducing the face value of the existing equity shares to Rs 4 from Rs 10.
Mangalam Timber, a B.K. Birla company, was contemplating forwarding this suggestion to the Board for Industrial and Financial Reconstruction, too, as it was considered to be a significant step towards the company's survival at that time.
However, the management now feels that such an act is no longer significant. "In the second and third quarter of the current financial year, the company has registered good profits. Hence, we no longer think that share capital reduction is necessary," a senior company official said.
For the quarter ended December 31, 2004, the company has recorded a net profit of Rs 89.02 lakh against Rs 17.54 lakh in the corresponding period of the previous financial year.
Gross sales jumped to Rs 16.14 crore from Rs 10.95 crore. Similar growths were also registered for the first nine months of the last financial year.
Against an accumulated loss of Rs 19.44 crore, the company has recorded a net profit of Rs 2.17 crore during the first three quarters.
On June 29, the board would also finalise the current year's results. When queried about the results, the official said it would be formally announced only after the board meeting.
However, in January, while talking to Business Line, Mr S.C. Gupta, Managing Director of Mangalam Timber, had said that the company might end 2004-05 with a net profit of Rs 2.5 crore.
The company may soon be seeking de-registration from the BIFR, as it had started registering profits. In the revival package, banks and financial institutions have already waived interest charges and the promoters have chipped in with Rs 10 crore.
The company has also sought some tax benefits from the Orissa Government.