JPL: Investors loss, promoters gain

Post-rights, the promoter’s stake will go up to around 40 per cent from 25 per cent at present. Correspondingly, the public shareholding will come down to 34 per cent from 48 per cent at present.

Interestingly, the low scrip price did not deter the UTI (the largest institutional shareholder) from picking up additional shares. As against its rights entitlement of 3.9 lakh shares, the institution has picked up 4.14 lakh shares. Post-rights, UTI’s stake in Jaipur Polyspinwill go up marginally from 18 per cent to 19 per cent.

Company officials say the undersubscription has provided a cheaper option to the promoters to hike their stake. Before the rights issue, the company was planning to make a preferential allotment of equity shares to the promoters at a premium.

However, IDBI, in its capacity as the lead institution, opposed the move and the proposal was subsequently dropped. IDBI’s objections stemmed from the fact that its policy guidelines did not permit preferential allotment to promoters who held more than 25 per cent stake. In February, Jaipur Polyspin came out with an at par issue at a time when the stock was quoting below par on BSE. The 1:2 offer, aggregating Rs 1.07 crore, was to part finace the Rs 6.82-crore balancing equipment project which has already gone on stream. For fiscal 1997, the company earned a net profit of Rs 57 lakh on a turnover of Rs 62 crore.