Reliance Capital, the financial powerhouse of the Anil Ambani group, has picked up nearly 9.5 per cent stake in Kanpur-based Shri Lakshmi Cotsyn for Rs 16.7 crore (Rs 167 million).
The Ambani company has acquired 13 lakh (1.3 million) preferential shares of the textiles company for Rs 129 per scrip.
Confirming this, M P Agarwal, chairman and managing director of Shri Lakshmi Cotsyn, said: " The company introduced preferential allotment of 37 lakh (3.7 million) shares and 11 lakh (1.1 million) warrants to outsiders including Reliance Capital and the promoters. The promoters acquired the entire warrant issue and a part of the preferential allotment."
A Mauritius-based institutional investor is among the other agencies who have bought the preferential shares.
The company had an equity base of one crore share. Post the preferential allotment, Reliance Capital's holding stands at 9.48 per cent on the expanded equity capital of the company.
The Anil Ambani group had picked up stake in a handful of companies including Saregama India, Gini & Johny, Kinetic Engineering and DTDC.
As on December 2005, the promoters held almost 36 per cent of the company's shares. Private bodies held about 38 per cent and the public 23 per cent.
Earlier this year, Lakshmi Cotsyn had tied up with the Dubai-based Global Impact to sell half of the 20 million metre of denim fabric that will be annually produced at its new plant in Uttar Pradesh. The deal is expected to be worth Rs 100 crore (Rs 1 billion).
The Rs 264 crore (Rs 2.64 billion)-plant in Uttar Pradesh, which will be operational by June this year, marked the company's entry into denim, terry towel, bed linen and cotton suiting segments.
To fund its Rs 264 crore investment, the company had planned to raise Rs 182 crore (Rs 1.82 billion) through term loans, Rs 62 crore (Rs 620 million) through equity and the remaining Rs 17 crore (Rs 170 million) through internal accruals. The new plant will increase Cotsyn's capacity to almost 80 million tonne and increase its turnover to Rs 1,000 crore (Rs 10 billion) by 2009.
"Next year we expect the turnover to touch the Rs 350 crore (Rs 3.5 billion) mark from Rs 282 crore (Rs 2.82 billion). Exports should increase to Rs 55 crore (Rs 550 million) from Rs 40 crore (Rs 400 million) in 2005. By 2009, almost 80 per cent of the produce will be exported," Agarwal told Business Standard.
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