Finally Some Cheer For Ricoh India’s Minority Shareholders, But No Sign Yet Of FY16 Financials
There was a perceptible change in mood among Ricoh India Ltd.’s minority shareholders at the company’s extra-ordinary general meeting (EGM) in Mumbai on Friday. Many shareholders told BloombergQuint that they were happy, or atleast relieved that the company’s Japanese promoter - Ricoh Company - was infusing new funds in order to revive Ricoh India, after an alleged multi-crore fraud came to light earlier this year.
On August 26, the National Company Law Tribunal gave its approval to a recapitalisation scheme that permits Ricoh Company to cancel all its shares and purchase new shares at a premium, thereby recapitalising the company to the extent of losses detected owing to fraud. That amount has currently been estimated by Ricoh India to be Rs 1,123 crore.
The NCLT had ordered Ricoh India to hold an “Extra Ordinary General Meeting under the monition and approval of monitoring authority”.
Ricoh Company owns 73.6 percent in Ricoh India via, and is extinguishing 27.56 percent amounting to 1,09,59,792 equity shares. The EGM held on Friday was to seek shareholder approval for cancellation of these shares and for issuing new shares at a minimum price of Rs 1,024.65 per share.
The issue price was determined as per SEBI ICDR regulations, under provisions for preferential allotment/ private placement, and represents a Rs 1014.65 premium over the face value per share and an over 200 percent premium over the last traded price of Rs 300 per share. The promoter is infusing a total of Rs 1,123 crore to recapitalize the losses incurred by the company due to fraud.
While results of the shareholder vote are expected to be announced on October 19, many shareholders told BloombergQuint they were in favour of the resolution as it will help revive the company.
Over the last ten months Ricoh India has been in the eye of a storm that involves, delayed reporting of financials, auditor red flags regarding accounting irregularities, a forensic audit, the suspension of its CEO, CFO and COO, a police complaint by Ricoh India against its own officials and shareholders’ effort to unseat four directors.
Amidst all this, Ricoh India has failed to file its financial results for three quarters starting October 2015 to June 2016, even tough it had assured shareholders that it would do the same by September 30, 2016. The lack of financial results resulted in the stock being moved to the Z category of the Bombay Stock Exchange - a category where settlement takes place on a trade-to-trade basis.
In the EGM on Friday, when asked about the as yet pending financial results, Ian Winham, the recently appointed chairman of Ricoh India, did not commit to any specific date but said that the company is very close to finalising accounts, and financial statements for 2016 should be ready in about two weeks.
Shareholders are worried that further delays could prompt a trading suspension.
We have no option as shareholders but to believe what the management is saying. If the management don’t fulfill their promise, then it will be disappointing. Now if the company doesn’t provide their earnings before December 12, then the scrip will be permanently cancelled. But the chairman was sounding very confident and I hope it will be out in next two weeks.Manthan Sanghvi, Shareholder of Ricoh India
Meanwhile, Ricoh India’s chairman said at the EGM that the cash infusion is critical as it will be used to pare down debt and aid the company to start operations. Despite this new round of capital raise, Ricoh India will continue to have significant amount of debt, said the management.
Ricoh also disclosed that its current order book stands at Rs 2,000 crore, executable over a period of 3 to 5 years.