ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Consortium Finance and Leasing

Oswal Fats and Oils Oswal Fats and Oils is a profit-earning and dividend-paying company engaged in the manufacture of fatty acids, stearic acid, industrial oil, de-oiled cake, edible oil, toilet soap and distilled glycerines. The company's Rs 10 paid-up equity share had a book value of Rs 83.51 as on March 31, 1992 and an earnings per share of Rs 37.28. Profit after tax was Rs 14.90 crore against a turnover of Rs 71 crore. Oswal Fats is diversifying in the field of paper and vanaspati ghee. It is setting up a 33,000 tonne writing and printing paper mill and a vanaspati unit of the same capacity at Shahi in Pilibhit, UP. The project will be implemented in two phases at a cost of Rs 162,54 crore. The first phase, to cost Rs 121.41 crore, is to be financed with a rights-cum-public issue of equity shares at a premium aggregating Rs 97 crore, issue of non-convertible debentures with detachable warrants aggregating Rs 7.50 crore and internal accruals amounting to Rs 16.90 crore. The second phase is to cost Rs 41.13 crore and is to be financed through issue of equity shares on exercise of option by warrant holders amounting to Rs 15 crore and through internal accruals amounting to Rs 26.13 crore. The paper project will be purely an agro-based project and envisages use of agro-based raw materials like bagasse and rice/wheat straw, etc, instead of wood- based raw materials which are difficult to procure and entail high cost. UP is the country's largest rice producing state and rice/wheat straw is available in plenty. Bagasse is also available from sugar mills situated within a radius of 30 km from the plant. The technology to manufacture writing and printing paper using bagasse straw as primary raw material is well established in the country. The main raw material for production of vanaspati ghee, viz, cotton seed oil, rice bran oil, til oil, rapeseed and mustard oil, etc, are all available indigenously. The company is entitled to exemption of sales tax liability up to Rs 18,169.46 lakh for a period of nine years on implementation of the above projects which are expected to result in a quantum jump in turnover and profitability. In the year 1994-95, the first year of full production of the proposed projects, the EPS is expected at Rs 23.94. In order to part finance the diversification, the company is entering the capital market with a public issue of equity shares. While the premium for the rights offer has been fixed for Rs 90 per share, the same for the public offer has been fixed at Rs 110 per share. The rights issue will aggregate Rs 40 crore. The public issue will total Rs 57 crore, including reservation for NRIs aggregating Rs 951 lakh. The public issue will open for subscription on February 9.

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