Samara Cap ups stake in Asian Oilfield, to make open offer

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Asian Oilfield Services has issued 4.05 million shares to Samara Capital. The shares have been issued on a preferential basis. The issuance is likely to help Asian Oilfield Services to raise Rs 24 crore. The company has a capex of nearly Rs 25 crore planned for this year. The funds will be used to diversify into mining rigs.

In an interview with CNBC-TV18, Avinash Manchanda, MD of Asian Oilfield Services spoke about the company's fund raising plans.

Here is a verbatim transcript of the exclusive interview with Avinash Manchanda on CNBC-TV18. Also watch the accompanying video.

Q: Samara Capital already owned about 14.9%, you are issuing more shares to them. Does it trigger an open offer? How much will they own with this issue?

A: Yes, I think post the issue of these shares it will trigger an open offer and they are ready for that.

Q: What is the agreement between you and Samara Capital? If there is an open offer will they pick up the 20% and then would they like to operationally run this company. You also have some oilfields through a subsidiary. Is this money going to be used then to get the oil or drill the oil? Could you tell us the purposes of what happens next once the open offer is made?

A: I think after the open offer, they want to consolidate their holding in the company so that they can grow the company in the next 3-4 years to a substantial size.

The aim is to make it at least a Rs 200-250 crore company and develop interest of some MNCs so that they can take their stake and they can quit because they are basically investors. They are not interested in running the company themselves.

Q: What was the price at which the shares were offered to them, what is likely to be the open offer price?

A: I think the cut off date or relevant date is fixed as 20th and tomorrow is going to be the last trading day. So the exact price will be known only on Friday.

Q: What would it approximately be, assuming that today's price stays till tomorrow?

A: I think it will be more than Rs 60. It will be between Rs 60-65.

Q: You said that Samara will increase its stake after the open offer and take charge of the company probably look for a MNC partner. What is the stand of the current promoters in that case, do you represent the promoters, are they likely to sell in to the open offer, do they want to retain control?

A: No, in open offer I am not going to be quitting this because it will be to the other shareholders and I will be continuing with the Samara's. If at all we have to quit, we will be quitting together in future.

Q: You had some oil fields, it is through a subsidiary and I think Vinay Maloo, one of those old HFCL promoters are also partners in that. What is the potential of that oil field, how much oil is there and are these proven reserves? Do you plan to start drilling or get an investor in that subsidiary?

A: These are investments based on optionally convertible warrants; this option is to be due in June 2010. We have the option to take back the money along with interest.

Q: So will you take it back or find more potential there?

A: Till now the picture is not very clear. It may take another few couple of months to take a decision whether to have a stake in that company or to take out the money.

Q: What is the current nature of the business? You ended your June '09 sales with Rs 61 crore, will the current year be just as good or are you expecting more orders from the PSU majors you service?

A: We already have confirmed order worth Rs 50 crore and another similar amount of orders are in pipeline for consideration. Recently, we have also started a division in which we are providing six core drilling services to mining industries.

Q: You had made a loss in the first quarter? Will you turn in to the black in the current or the next quarter?

A: Normally in the off season, that is the monsoon season, the season begins in the last quarter of the year and it continues till the first and second quarter of the calendar year. So, the seismic business is a seasonal one. That is the reason we are trying to get in to other fields also where the seasonality of the business does not affect the turnover.