In a note to the stock exchange, Birla Corporation noted that its board of directors met on Monday and cleared the rights issue price at Rs 19. The company will be issuing 2,20,01,528 shares in the ratio of two shares for every five held.

Earlier, the company had decided to issue three shares for every ten held by the shareholders.

It reported a net loss of Rs 38.36 crore for the year to March 31, 2000, on a turnover of Rs 1038 crore. However, for the year to March 31, 1999, its loss was higher at Rs 53.62 crore on a turnover of Rs 900 crore. Its scrip closed at Rs 21 on the Calcutta Stock Exchange on Monday against an opening price of Rs 20.90. The 52-week high and low was Rs 21 and Rs 20.90 respectively.

Birla Corporation has a huge annual interest payout of Rs 52.53 crore and a massive debt component of Rs 314.92 crore of which Rs 266.75 crore is secured and the balance Rs 48.17 crore unsecured. The issue was cleared by the Securities & Exchange Board of India on December 1. The funds raised will be used for capital expenditure on the modernisation and to fund partly the cash losses.

The company's 1999 rights issue had carried a Rs 22 premium on a face value of Rs 10 share. Though the company claims that the issue was oversubscribed, market sources maintain that the issue just managed to scrape through.