Whirlpool plans rights issue

The proposed infusion of Rs 70 crore – Rs 110 crore would include any premium that may be attached to the rights issue.

It is widely believed that the capital expansion had become necessary to protect erosion of the company’s net worth dueto the mounting losses suffered in the last few years. The company has suffered losses to the tune of Rs 161.14 crore by December 1996. In the first half of 1997,it had reported loss of Rs 57.73 crore. The board of directors of the company had, at its last meeting on January 15, approved the merger of Whirlpool of India and Whirlpool Financial India Private Ltd. The merger was necessitated by the US-based white goods major’s decision to exit from the consumer financing business.

The merger ratio is currently being worked out by the auditors of the two companiesS R Batliboi & Co and Mumbai-based Raiji & Co. The ratio is expected to be finalised by April. The total holding of the parent company Whirlpool Corporation is expected to go up from the present level of 56 per cent once the merger is effected, as the finance company is held by the Whirlpool of India and Mauritius-based Whirlpool Finance.

The company would seek fresh approval from the FIPB, once the decision on the rights issue and the mergerformalites are completed.

The fresh infusion of funds coupled with the merger would ease the funds crunch.