Investors seem to have realised the potential of this investment opportunity and the counter has witnessed some buying interest in the past couple of trading sessions. After a sharp fall from a high of Rs 148 on October 12 to Rs 76.7 on November 24, the stock gained almost 9 per cent in two trading sessions. The stock had touched the 148-level on hopes of a turnaround in the company.

As the average cost of acquisition works out at an attractive Rs 70 and if the company turns the corner in the near future, entry at current levels could pay rich dividends.

Even after the plunge in the Henkel SPIC India stock, the rights offer isat a sharp discount of 46 per cent to the current market price of Rs 83.55. The company is mobilising Rs 166.12 crore through the rights issue. Of the issue proceeds, Rs 29 crore is going towards retiring high cost debt, Rs 18 crore towards redemption of preference shares, Rs 62.33 crore for various acquisitions and Rs 48 crore for brand and product development. The repaying of high cost debt will help Henkel save on interest cost and stage a turnaround.

Henkel SPIC is engaged in the manufacture of detergent powder, detergent cakes, dishwasher and cleanser products. The company is now focussing on improving its market share. As part of this strategy, it has acquired 55 per cent equity stake in Calcutta Chemicals which is engaged in the manufacture of soaps, toiletries, detergents and cosmetics. The other acquisition is of Detergents India which owns brands like Chek, Super Chek and Regal.

The company's efforts to improve its market shares already started yielding results. For the first six months endedSeptember 30, 1999, Henkel Spic India reported a 132 per cent jump in sales to Rs 131.02 crore from Rs 56.40 crore in the corresponding six months of the previous year. Gross profit improved from Rs 4.58 crore to Rs 5.40 crore. As a positive sign, net losses declined by 65 per cent to Rs 1.33 crore from Rs 3.86 crore.

For the 18-month period ended September 30, 1999, the company reported a Rs 143-crore turnover. For the calendar year 2000, the company has projected a turnover of Rs 300 crore. Post-issue, the paid up capital of the company will bloat from Rs 73.83 crore to Rs 110.75 crore. The promoters of Henkel SPIC have already expressed their willingness to increase their stake from 64 per cent upto a level of 70 per cent by subsbcribing to the unsubscribed portion of the rights issue, if any.