New Delhi, Feb 12: The board of directors of VLS Finance has announced a bonus issue in the ratio of one share for every share held. The bonus comes at a time when the company's shares have seen a steady erosion in their value ever since it tapped the market with a premium of Rs 390 in 1994.According to a release from the company, the management considers ``it was approporiate time to reward'' the shareholders. The bonus issue was announced at the annual general meeting of the company on Wednesday.
Market sources say that the scrip has already appreciated over the past few sessions in anticipation of the bonus issue.
Over the last few trading sessions, the scrip has moved up from a low of Rs 37.50 on January 29 to the current level of Rs 45.20. At the current price, the value of the investor's holdings is a tenth of the offer price of Rs 400 at the time of the public issue. The bonus will partly compensate the investors for the losses that they have suffered.
The 1:1 bonus will be issued bycapitalising Rs 6.53 crore out of the reserves and surplus of Rs 183 crore. As a result, the book value per share will come down from Rs 292 to Rs 146 per share.
At the annual general meeting (AGM), the management also announced that it would achieve a zero debt status by the end of the current financial year. As against the net worth of Rs 190 crore, the company has debts amounting to Rs 17 crore, largely institutional and banks. The company does not have a public fixed deposit programme.
The company plans to refocus its business strategy to include investment banking activities. Besides, it hopes to generate substantial fee income as opposed to a fund-based approach.
Recently, the promoters of VLS Finance have brought in Rs 4 crore through conversion of warrants at a price of Rs 400 per share. While most finance companies have been caught in the deposit-default trap, VLS, which has no public fixed deposits, could not accelerate its business.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
