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Kitchen appliances major Gandhimathi Appliances Ltd is planning to raise Rs 100 crore through private equity investment into the company for capacity expansion and “a few upstream projects”, said Mr V.M. Seshadri, Managing Director, Gandhimathi Appliances. The company has given the mandate to Motilal Oswal Financial Services for the purpose.
Gandhimathi Appliances manufactures and markets a range of appliances from pressure cooker to mixer grinders under the brand name Butterfly. Currently, the promoters own 62 per cent stake in the company.
Merger move
In order not to dilute its stake in the company after PE infusion, it proposes to merge Gangadharam Appliances Ltd (promoted by the same family) with itself. “The merger will enable us to increase our stake in Gandhimathi to over 78 per cent, and will be reduced to around 67 per cent after the proposed PE investment” elaborates Mr Seshadri.
The merger proposal is still pending with the BIFR (Board for Industrial and Financial Reconstruction). “We have already submitted our Modified Draft Rehabilitation Scheme with the authorities,” he says.
The BIFR case
Gangadharam Appliances went to BIFR in 1998. Following which, the promoters came out with share buyback offer. It currently owns 99.1 per cent stake in the company. In 2007, the promoters represented that they were planning to revive the unit with the help of an overseas venture capital company.
The venture capital company was willing to infuse Rs 23 crore to settle its debts and also meet a part of the working capital requirements. However, the proposal did not come to fruition as it did not get the required approval from the Government.
Later, the promoters themselves settled the dues. The company at present does not have adequate working capital, and is therefore doing job work for Gandhimathi Appliances.
Similarly, Gandhimathi Appliances also went to BIFR in 2003 and came out in 2008 following the settlement of loans to the tune of Rs 40 crore raised from promoters' personal funds. For the nine months ended March 31, 2011, the company posted a turnover of Rs 220 crore against Rs 156 crore in the comparable nine-month period in the previous year. Net profit stands at Rs 10.87 crore (Rs 7.25 crore). On an annualised basis, earnings per share work out close to Rs 16.
The company's share closed at Rs 349.35 on Friday (July 22) on BSE.
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