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The parent company, AB Electrolux, Sweden controls 75.96 per cent of the company's equity while the Indian promoters hold 9.64 per cent with the balance - 14.40 per cent - being distributed among the public and FIs.

NEW DELHI, July 11

ELECTROLUX Kelvinator Ltd (EKL), the Indian subsidiary of Swedish white goods major AB Electrolux, is working out alternative options for its proposed rights issue following the recommendation of the Securities and Exchange Board of India (SEBI) to reject the offering.

The capital markets regulator whose views were sought by the Foreign Investment Promotion Board (FIPB) had recommended rejection of the proposal since it reckoned that the move could result in the delisting of the company from the bourses.

A SEBI-sponsored committee is already working on formulating fresh guidelines to ensure more stringent norms for delisting, especially by foreign companies. The SEBI move has come in the wake of criticism on the delisting from Indian exchanges by scores of multinational companies.

However, Mr Ram S. Ramasundar, Managing Director, EKL, told Business Line that the company had already informed the market regulator that it had no intention of delisting. "We are now looking at alternative options,'' he said.

With SEBI's recommendations bound to stop the company on its tracks, Electrolux Kelvinator is now weighing other options including changing the size of the proposed rights offering. The original proposal envisaged the company coming out with a rights issue of 24,97,18,386 equity shares of Rs 10 each.

The parent company, AB Electrolux, Sweden controls 75.96 per cent of the company's equity while the Indian promoters hold 9.64 per cent with the balance - 14.40 per cent - being distributed among the public and FIs.

Earlier, minority shareholders had expressed apprehensions about a possible delisting of the company if the entitlements of the non-AB Electrolux shareholders were to remain unsubscribed and the foreign partner subscribes to it. In such a scenario, the foreign shareholding in the company would go up to 91 per cent. To this, Mr Ramasundar said that "We are not interested in buying out the minority shareholders.''

Meanwhile, the company's application with the Foreign Investment Promotion Board (FIPB) was also deferred as comments from SEBI were sought on this proposal.

The company had submitted to FIPB that EKL had incurred operational losses and required funds to meet capital expenditure. It proposed to expand the share capital by way of a rights issue to the existing shareholders. AB Electrolux had confirmed its willingness to subscribe to any shortfall in subscription by other shareholders to the rights issue in addition to its own entitlement of 75.96 per cent.

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