The parent has decided to pick up the unsubscribed portion of DIC India's rights issue. Small shareholders had refused to participate since it had been priced at Rs 210-Rs 230, close to a 52-week high. The scrip is now ruling at Rs 190. Dainippon has agreed not to de-list the company, which is now planning a major expansion programme.
"The promoter holding in the company currently stands at 65.76% of the current issued and paid-up capital. The promoter has confirmed that it intends to subscribe to the full extent of its entitlement in the proposed rights issue. In the event of under-subscription, the promoter also intends to apply, to the extent of under-subscription for additional equity shares in the proposed rights issue. As a result of this subscription and consequent allotment, the promoter may acquire shares over and above its entitlement in the proposed rights issue, which may result in an increase in the shareholding," the company board said in its explanation of the rights issue resolution. The company proposes to issue 22,95,179 equity shares on a 1:3 rights basis at a price band of Rs 210-230 a share, which will result in the company raising between Rs 48 crore and Rs 53 crore.
A majority of small shareholders passed the resolution at the annual general meeting of the company held on Tuesday. Some shareholders termed the issue a preference share issue systematically done to hike the Japanese parent's stake in the company.
Replying to the shareholder's concern, DIC India managing director PK Dutt said that the issue price was arrived at after considering the intrinsic value of the company and its track record.
"We cannot offer a price that doesn't indicate the intrinsic price of the shares," Dutt told shareholders. The company's 2006 bottomline dropped to Rs 9.98 crore, from Rs 10.13 crore, owing to high crude oil-based input prices, despite a 22% growth in topline at Rs 339.50 crore.