The EGM was held to take shareholders' consent on among other resolutions to mortgage the company's movable and immovable properties on terms and conditions for securing any loan of up to Rs 100 crore.

On a shareholder's query as to how would the company take on a huge debt burden as such, Punoose said that while the resolution is an enabling one, the company is not going to borrow the whole cost. Financing will be a combination of debt and equity.

Corn Products (India) is a subsidiary of the New Jersey-based Bestfoods. The company is in the process of acquiring DCW Home Products Ltd's salt manufacturing facility at Gandhidham in Gujarat and the trademark `Captain Cook'. As asecurity for the loans to be sanctioned by financial institutions and banks with whom the company is negotiating for financial assistance for the proposed acquisition, the company may be required to mortgage its movable or immovable properties.

Punoose told shareholders that the company will fund the acquisition partly through debt and partly through equity. However, he did not reveal the break-up. "The deal is not through as yet. We are still in the process of formalising the legal and other such aspects."

The capacity of the plant which Corn Products plans to acquire is claimed to be 2.5 lakh tonnes. Punoose said that the need will be fulfilled by acquiring just one facility of DCW instead of all the three as there was no compulsion to take over all the three facilities. Further, he said that the company would go in for a toll manufacturing agreement for salt as and when the need arises.

Regarding the legal suite slapped on DCW by one of its dealers against the move to sell its facility and trademark,Punoose said that this was not of any concern to Corn Products though it may just delay the deal. He, however, said that the company hopes for an early closure of the deal.

On the existing competition in the iodised salt business, Punoose said that Captain Cook has proved its mettle by creating a strong brand equity in the face of stiff competition from old player Tata Salt.

The shareholders also passed the resolution to redeem 24,000, 14 per cent redeemable cumulative preference shares aggregating to Rs 24 lakh allotted on private placement basis in 1989 to the General Insurance Corporation of India and its four subsidiaries. The company is thus increasing its authorised share capital.

INSIGHT: dilution likely to halt stock appreciation

Looking at its balance sheet, Corn Product has little choice but to fund the acquisition by a mixture of debt and equity, unless of course its parent company decides to step in to provide loans. On its own, Corn Products would have found it difficult to raisedebt as its networth as on March ending 1998 was just Rs 20.5 crore. However, its accumulated losses of Rs 10 crore in 1997-98 has been wiped out with a Rs 11 crore profit in the first quarter.

The company's financial situation is so bad that it is issuing preference shares to redeem its earlier issued preference shares. With further dilution on the anvil, there is little likelihood of any appreciation in the stock.