Mukand Ltd, a Bajaj group company that is into steel, machine building and turnkey projects, plans to raise Rs 154 crore through rights issue in the ratio of 1:1.

It has priced the issue at Rs 21 per share (including premium of Rs 11 per share).

The board of directors today approved the price and equity ratio for the proposed rights issue to raise approximately Rs 153.54 crore.

However, the issue price, including the premium, is very close to the stock’s closing price of Rs 21.50 on the BSE today.

The company is weighed down by a huge finance cost that saw it make losses even after making a sizable profit quarter-on-quarter. During the last fiscal (2012-13), the company earned a net profit of Rs 58.71 crore on a turnover of Rs 2,280.52 crore. But a huge finance cost of Rs 215.38 crore saw it post a loss of Rs 156.66 crore.

In the quarter ending September 30, 2013, the company’s income from operations stood at Rs 623.90 crore, significantly higher than the Rs 519.79 crore it made in Q3 of 2012-13. The net profit before finance cost was Rs 36.61 crore. But after providing for finance cost of Rs 56.98 crore, Mukand ended with a net loss of Rs 20.36 crore, which swelled to Rs 31.21 crore after adjusting for forex loss.

The company had earlier this month announced that it was divesting its entire shareholding in its former joint venture Bekaert Mukand Wire Industries, acquired at a cost of Rs 13 crore, to Bekaert Industries Pvt. Ltd. for a sale consideration of Rs 5.25 crore.

With a huge paid-up capital of Rs 73.12 crore, the EPS was in the negative at – Rs 4.27 in the quarter ending on September 30, 2013. The promoters’ holding in the company as at the end of September 30, 2013, was 39,278,804 shares, forming 53.72 per cent of the equity. However, 16,090,431 shares were pledged/encumbered, constituting 22.01 per cent of the share capital.

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