TVS group company Wheels India Ltd, which is into the manufacture of steel wheels, is coming out with a rights issue at a near 50 per cent discount to the current market price of the share.

The rights issue is being offered to meet the SEBI norm on minimum public shareholding in listed companies and hence the promoter group would not be participating in the rights offer.

In a communication to the stock exchanges, the company said that the Committee-Capital Issues formed by the board of directors of Wheels India on February 3 had approved the proposed rights issue of equity shares at ₹400 per share (including a premium of ₹390 per share).

The issue ratio would be 51 equity shares for every 20 shares held by eligible shareholders as on the record date. The company would be offering 21,62,835 shares as part of the rights offer.

The company's board had on December 16, 2013, approved the rights issue to comply with the SEBI rule on minimum public shareholding in listed companies. Promoters and promoter group shareholders would forego their rights entitlement, as allowed by SEBI rules, it had said.

As at the end of December 2013, the promoter's stake in the company, which has an equity base of ₹9.87 crore, was 91.44 per cent. While DIIs held 0.58 per cent stake in the equity, others held 7.98 per cent and the share of FIIs was nil.

SEBI rules required a minimum public shareholding of 25 per cent in the equity of all public limited companies, excluding PSUs that should have at least 10 per cent public shareholding.

But the announcement failed to create a flutter in the stock price with the stock trading at ₹ 833, a gain of Rs 4, on the BSE. The stock had opened at ₹824 (previous close ₹829) and touched a high of ₹833.80 and a low of ₹804 before settling at the current levels.

In the quarter ended September 30, 2013, the company recorded a net sales of ₹426.39 crore and a net profit of ₹8.73 crore. EPS for the quarter was ₹8.85.

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