Fast moving consumer goods company Emami Ltd is planning a public issue to comply with Securities and Exchange Board of India regulations on promoter holdings. Sebi rules specify that the public should hold at least a 10 per cent stake in the company.
The promoters currently hold about 96 per cent of Emami's equity.
The board will be meeting on Monday to consider and approve the draft red herring prospectus. Sources close to the development confirmed this, but the extent of the dilution by the promoters could not be ascertained.
"We are still working on it and so the quantum of funds to be raised through this issue is yet to be decided," the sources said.
The share capital of the Rs 216.81 crore (Rs 2.17 billion) Emami was Rs 11.23 crore (Rs 112 million) on March 31, 2004.
Market sources indicate that the issue may be at a discount to the current market price. The scrip closed at Rs 70.65 on the Bombay Stock Exchange on Friday.
"The main objective is to comply with the market regulator's compliance norms and the cash generation is incidental and not for any other purpose such as expansion or acquisition, they explained.
Broking houses ICICI Securities and Anand Rathi Securities are understood to be in the running for handling the issue.
Emami's revenues grew 8 per cent to Rs 41.81 crore (Rs 418 million) in the September quarter 2004 over the same quarter last year. Its bottomline stood at Rs 4.55 crore (Rs 45 million), up 5 per cent over the same period last year.
The Kolkata-based Emami makes over 20 personal, beauty and health care products, based on herbal and ayurvedic methods.
Its main brands are Boroplus antiseptic cream, Navratna oil, Sona Chandi chyawanprash and Amritprash, Mentho Plus pain balm, Fast Relief, Golden beauty talc and Madhuri range of products.
Its manufacturing facilities are located at Kolkata, Pondicherry, Guwahati and Mumbai.
