Khaitan plans pref issue to fund expansion

MUMBAI: Khaitan Electricals, the Rs 200-crore company, part of the Kolkata-based SK Khaitan group, is planning a preferential share issue to part-finance its future expansion plans and meet growing demand. According to a senior company executive, Khaitan Electricals plans to issue 4.2m equity shares, on a preferential basis, to promoters and select independent allotees at Rs 139.30 a share.

The company’s finance director GR Choudhary said: “The board of directors is scheduled to meet on Monday, after which a final call on the issue will be taken.” The share issue is expected to reduce the promoters’ shareholding to 34% from the current 35%.

Proceeds from the issue will be used to finance capex and working capital requirements. The company, which makes high-end electrical products, recently increased its product portfolio and is also building a new manufacturing plant in Uttaranchal.

Some of the segments that the company has entered into are PVC cables, miniature circuit breakers and electrical tapes. “The demand for such products looks robust...we’re targeting a Rs 400 crore turnover by the end of this (fiscal) year,” said Mr Choudhary.

Makers of electrical consumables have been setting up new manufacturing facilities to meet rising demand. Recently, industry leader, Bajaj Electricals, said it plans to set up a new fabrication plant at Ranjangaon near Pune.

Analysts say demand for consumables and has been rising, especially in rural areas. A recent Prabhudas Liladhar report said that growth in consumer demand is broad-based with low penetration categories like personal products and homecare leading the pack.

Shares of Khaitan Electricals ended down 4.9% at Rs 127.60 on Friday at the Bombay Stock Exchange.