Antarctica: Below Average

Score: Below Average

S. Vaidya Nathan

SHAREHOLDERS of Antarctica can avoid the rights offer as the business plans, using the offer, may not create any room for long-term revenue growth.

The earnings stream may also not grow sharply enough to keep apace with the share capital base of Rs 21.6 crore. In this backdrop, the scope for capital appreciation may be limited from the offer price of Rs 10 per share. But the stock could be tracked for possible investment at a later date.

The company made an initial public offer in 1994 and is engaged in the business of manufacturing printed packaging material and has inhouse pre-press set up. The track record of the company has not been impressive and the project that was scheduled to be implemented using the offer proceeds of the IPO suffered a four-year delay.

To some extent, this was attributed to the fire accident which destroyed the company's plant in 1996 and, as a consequence, it almost had to start all over again. The scale of operations since then have been a far cry from what was initially projected.

The company now plans to use the rights offer proceeds to retire debt and also augment long-term resources so that it can capitalise on emerging opportunities. If the plans do not materialsie, the company intends using the entire amount to retire debt and make it debt-free.

While the move to retire debt may improve the profitability to some extent, the level of earnings may not be good enough to generate any significant capital appreciation. For 2000-2001, the company's sales were Rs 14.14 crore and profits Rs 1.64 crore as against Rs 7.38 crore and Rs 0.43 crore in 1999-2000.

The projections seem optimistic. In this backdrop, shareholders can steer clear of the rights offer. The stock is listed on the NSE and is to be listed on the BSE, DSE and CSE. The lead manager is SBI Capital Markets and the equity base is Rs 21.67 crore. The promoter is Mr Ranjan Kuthari.