Orient Garments gets bullish, goes for Rs. 825 m Rights

Orient Garments Plc (OGL) is going to raise Rs. 825 million via a one-for-one Rights Issue to boost its operations.
Funds raised will be to retire high interest rate borrowings and to increase the working capital, which will enhance operations, OGL said.
The move subject to shareholder and regulatory approval will entail issuance of 55 million shares at Rs. 15 each. The current stated capital of OGL is Rs. 90.5 million represented by 55 million shares.
The decision to go for the Rights Issue was resolved by the OGL Board of Directors at its meeting yesterday.
OGL’s move was announced after the market had closed. Yesterday it was trading at Rs. 18.50, down by 70 cents, whilst it touched an intra-day high of Rs. 18.80. The Rights is priced at a discount to the market but it is higher than the net asset per share which was Rs. 12.60 (at group level) and Rs. 11.45 (at company level) as at end June 2014.
Adam Investments Ltd. holds a 39.7% stake in OGL whilst high net worth investor Dr. T. Senthilverl holds 45.4%. Public float of OGL is 15%.
In the quarter ended 30 June 2014, OGL posted a group loss of Rs. 36 million, down from Rs. 64 million a year earlier whilst at Company level the loss was Rs. 33 million, lower in comparison to Rs. 60.6 million in the first quarter of last year.
Revenues were down to Rs. 554 million for the Group from Rs. 744 million. Lower profit is largely due to reduced cost of sales, which was Rs. 499.8 million in June 2014 as against Rs. 704 million a year earlier.