Speciality chemicals major Vikas Lifecare announces fundraising plan via preferential allotment

As per the filing by VLL, the issue price for the preferential allotment has been fixed at Rs 4 per warrant for a cash consideration amounting to Rs 97 crore.

The warrants carry a right exercisable to subscribe equity shares per warrant.

High-end speciality chemicals major Vikas Lifecare, which is also the del-credere agent of the country's largest crude oil and natural gas producer ONGC, has announced a fundraising plan to the tune of Rs 97 crore.

The Delhi-based firm has informed in a filing that it has approved the allotment of 24.25 crore fully convertible warrants. The warrants carry a right exercisable to subscribe equity shares per warrant.

A warrant is a kind of financial instrument that lets the holder to subscribe the equity shares of a company at a predetermined price within a certain period. The predetermined price is called the strike price.

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Stock warrants are designed to help raise capital, encourage investors to invest, and create long-term interest in the stock of companies. They are also appealing to those investors who believe that a company offers an attractive long-term potential.

As per the regulation, a listed entity can raise funds through the issue of warrants on a preferential basis to meet working capital requirements, expand its operations and meet general corporate purposes.

As per the filing by VLL, the issue price for the preferential allotment has been fixed at Rs 4 per warrant for a cash consideration amounting to Rs 97 crore. This is, however, subject to the approval of the shareholders and other statutory approvals. Earlier, it had approved the issuance of 10 crore warrants to promoters, amounting to Rs 40 crore.

Vikas Lifecare is a del-credere agent of ONGC which contributes around 71 per cent to the total domestic production. It recently entered into a joint venture agreement with Indraprastha Gas Limited (IGL) to set up India's first integrated smart meter manufacturing unit. The manufacturing plant is being set up jointly by the two companies at a capital expenditure of Rs 110 crore. Notably, the government has launched a smart metering initiative to install 250 million smart meters across the country by 2025.

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