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CMC seeks permission for Rs 1 billion rights issue

The company has proposed the matter to the government that has an equity holding of 84 per cent, Chairman and Managing Director S S Ghosh has been quoted as saying.

T O D A Y

• Spending for rainy day • CMC plans rights issue • Loral Orion steps in • QAD, Origin tie up

CMC planned the rights issue since its authorised capital of Rs 350 million has not been met with. It has only the paid-up capital of Rs 151 million so far, he said.

However, pricing of the issue and size of the allotment lot would be decided by the government, Ghosh explained.

He said the government has been informed of the matter and a decision would be taken any time. Meanwhile, the company has also referred an employees' stock option plan to the government. Decisions on both the issues are expected simultaneously.

CMC has also written to its parent body, the Department of Electronics, to bring down the government equity to below 50 per cent so that it could come out of government control and function more independently.

One of the options is to offer part of the government stake to Indian financial institutions, he said, adding it is better to offload the equity in favour of EOSP.

The company has appointed ICICI-Securities to undertake one more study to find out the options of funding after evaluating the company, Ghosh said.

Referring to CMC's proposal to bring down government equity below 50 per cent, he said there might not be any immediate decision.

CMC has sought government permission for an investment of $1.5 million in its American subsidiary, Baton Rouge International, since the company plans to do much better in the US and Canadian markets in the coming years.

BRI had made $17 million during the 1997 calendar year and unaudited results of the company during the first half of current fiscal show revenue of $11 million.

The overall turnover during the current year would be to the tune of $22 million to $23 million, M R Ghosh said.

CMC has posted a record turnover of Rs 1.48 billion for the first half of the current fiscal with a 72.34 per cent growth in net profits over the same period last year.

Its half-yearly turnover went up from Rs 1.23 billion over the same period last year to Rs 1.48 billion, even as net profit crossed Rs 27.2 million over Rs 15.7 million during the first half of last year.

The company anticipates turnover for current year to cross Rs 3.5 billion and revenue from its American subsidiary to reach Rs 1 billion during the calendar year up from last year's Rs 550 million, he said.

- Compiled from the Indian media

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