Saturday, April 10, 2010

SURYACHAKRA POWER LTD: PLAN TO DILUTE EQUITY AND RAISE LOAN

Dear Mahesh ji,

please have your view about suryachakra power.

regards
sanjiv

1.Suryachakra Power Corporation Ltd plan to issue, offer and allot in international offerings any security including, Global Depository Receipts (GDRs) and / or American Depository Receipts (ADRs) convertible into equity shares ("securities") for an aggregate sum of up to US $100 million, directly to foreign / non-resident investors.
2. I think issue of ADR /GDR may give a positive effect in short term and you may see a short term rally in this share but in long term it is a negative news because company plan to dilute it equity and equity dilution always give a negative effect on EPS and EPS of suryachakra power is already 0.20 only.
3.Suryachakra Power Corporation Ltd also plan To increase the existing Authorized Share Capital of Rs. 90,00,00,000/- (Rupees Ninety Crores only) divided into 9,00,00,000 (Nine Crores) Equity Shares of Rs. 10/- (Rupees Ten only) each to Rs. 150,00,00,000/- (Rupees One Hundred and Fifty Crores only) divided into 15,00,00,000 (Fifteen Crores) Equity Shares of Rs. 10/- (Rupees Ten only) each .
4. This is also dilute EPS of company.
5. Suryachakra power also plan to make loan(s), give any guarantee, provide security in connection with loan(s) made to and / or acquire by way of subscription or purchase, the securities of Subsidiary Companies and other Bodies Corporate up to Rs. 500 Crores.
6. I think these steps make this company a high debt company and promoter already pledged his 79 percent share against loans (promoter holding in suryachakra power is 51.37 percent but after these purposed steps promoter holding dilute in this company)
7
. Suryachakra Power Corporation Ltd has informed BSE that the name of "LAHARI POWER AND STEELS LTD", a subsidiary of M/s. Suryachakra Power Corporation Ltd, has been changed to "SURYACHAKRA GLOBAL ENVIRO POWER LTD" w.e.f. March 19, 2010.
Further the Company has informed that M/s. Climate Change Investment, Luxemburg (CCI) has entered into an agreement with Suryachakra Group for acquiring 26.1% stake in Suryachakra Global Enviro Power Ltd, at Rs. 28.98 Per share. Out of the total Investment of Rs. 500.50 Mn, the first tranche of Rs. 400 Mn has already been received. CCI has also committed to take part in the future Renewable Energy Projects of the group.
8. Book value of suryachakra power is 17.9
9. So overall I did not like this company but in view of above news a speculation rally for distribution of shares is expected (it is market style when a company plan to raise money and dilute equity market make a news base speculation rally before downtrend).
10. I personally hold 75 share of this company but in this rally I try to look a comfortable exit.
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