By CL Jose
Kerala Govt with 32.42 pc stake sets aside Rs200 cr towards issue
KOCHI/March 14-2022: The Cochin International Airport Ltd (CIAL), the third busiest airport in the country in terms of international passengers, and the largest player in Kerala, is set to boost its capital base by about a half or 50 per cent.
The increase in capital is going to be effected through a rights issue for which the Kerala Government, the largest shareholder with 32.42 per cent stake, has already ‘budgeted’ Rs200 crore.
CIAL, the vanguard that helped in heralding the public-private partnership (PPP) philosophy in the state, will see its capital base or ‘total shareholders’ equity’ grow from the present Rs1272.08 crore to about Rs1890 crore once the issue is successfully concluded.
While the paid-up capital of the company is Rs382.57 crore as of March 31, 2021, around Rs890 crore has been piled up by the company to build a sizeable net worth through its profitable operations over years.
While presenting the budget for the financial year 2022-23 (FY23), the finance minister KN Balagopal had said the board approval for CIAL’s rights issue was already in place though it needs to be ratified by the shareholders before the issue can take off.
[In a rights issue, the existing shareholders get a chance to invest in the share capital of the company in proportion to their shareholding].
Loss, No dividend
CIAL, like any other aviation-related entities, did feel the pinch during the past two years as the pandemic broke the back of the economic systems the world over.
CIAL never had a chance to taste loss since the financial year 2001-02 (FY02), but was ‘in red’ for FY21, when the company reported a loss of Rs87.21 crore.
Moreover, the company, which hasn’t had to skip cash dividends since as early as FY04, was constrained to forego the largesse this time around, leaving the hundreds of shareholders surprised.
Though there have been exhortations from a large section of shareholders to list the shares of the company on stock markets, the government has not yet considered it sympathetically, and this has literally left the uninitiated shareholders high and dry wondering what their shareholdings is worth on a given day.
Rights issue size?
While most small shareholders are in the dark about the rights issue, a top official from the Finance Department in Thiruvananthapuram confirmed to Businessbenchmark,news that the airport operator is giving the finishing touches to the issue process.
Ascertaining the exact size of the rights issue (the ratio) or the pricing of the shares thus issued though could amount to making a wild guess, the quantum of fund the issue would raise has been extrapolated from the government commitment to the issue (Rs200 crore) and the shareholding it enjoys in the company (32.42 pc).
The company that has famously entered into diverse areas of commercial activities including power generation, inland waterways, etc, under the leadership of its founding managing director, VJ Kurien, is certain to have more innovative projects up its sleeves.
Not much cash
Being lavish on distributing cash dividends to its shareholders over years, it’s obvious that CIAL’s pockets are unlikely to be deep enough to fund huge projects in the immediate future. The company with total borrowings close to Rs600 crore (as of March 31, 2021), doesn’t have much cash balance as per its latest balance sheet.
