Will use issue's proceeds to fund EOU: Today's Writing

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show »

Today's Writing has approved a follow on issue of 50 lakh shares at a fixed price of Rs 78 a share. The company says that the issue that will come out in May will be used to fund its Export Oriented Unit.

 

The company's CFO Deepak Nanda says that the EOU will start contributing to the company's revenue from July 2006.

 

 

Excerpts from CNBC - TV18's exclusive interview with Deepak Nanda:

 

 

Q: Tell us about this follow on offer? When do you intend to put it in place?  What do you intend to raise this money for?

 

A: We are planning to bring out this issue sometime in May. We are setting up a 100% EOU (Export Oriented Unit) to manufacture 2 million pens a day. Bulk of these funds will go into financing that project there.

 

Q: In the past you also had preferential allotments. Do you intend to tap that route? At this point of time, can you give us a break up of equity? How much is there with Today's Writing, and how much is with other investors?

 

A: We have reserved about 40% of the issue for NRIs, FIIs mutual funds and banks. About 10% of the issue is reserved for our existing shareholders; and the rest is open for the public.

 

Q: How long will it take before we can really see revenues being ramped up out of your expansion plan?

 

A: We expect our EOU to start contributing from July onwards to our revenues. We will see a significant ramp up in revenues based on the IPO money that we will collect from July 2006 onwards.

 

Q: Is this the total amount you require for this EOU, or would you have to tap other instruments or as well for it?

 

A: We have diversified into stationary items as well with effect from April 1, 2005. We outsource pencils, rubber, and notebooks and brand them under Today's and move it through our existing distribution network. We have about 4,40,000 retail outlets all around the country. So some of these funds will be utilized to ramp up, as we have been very successful in growing that segment of our business over the last one-year. We would like to put added emphasis on that area of our business.

 

Q: Following this new follow on public offer, how much Today's Writing total equity will increase to? Can you give us a projection of what kind of EPS we can expect on diluted basis?

 

A: We can talk about whatever is mentioned in the prospectus. But even on a diluted equity, whatever is our EPS in the current year even we should be able to better the EPS that we will have in the current year. For there will be growth in our revenues and bottomline.