Maharaja Foods to raise Rs.112.5mn via rights issue

Maharaja Foods PLC said on Friday that its board of directors had approved a rights issue of 12.5 million ordinary shares, at Rs.9 each, equivalent to one new share for every 10 existing shares, subject to shareholder approval. 

The board noted that the issue price is “fair and reasonable” to the company and its existing shareholders.

The proceeds from the rights issue will be used to support multiple strategic initiatives. The company plans to allocate Rs.47.5 million to establish a SPAR–Maharaja SaveMore retail outlet in Kotahena, including Rs.17.5 million for setup costs and Rs.30 million for one month’s inventory requirements. 

A further Rs.50 million will be used to retire short-term loans and overdraft facilities with Hatton National Bank, helping to reduce finance costs. 

Additionally, the company intends to invest Rs.15 million in developing a new product line of ready-made rice (Biryani mix) and curry mix products, covering machinery, inventory and marketing expenses to cater to the growing ready-to-eat and instant food market.

Maharaja Foods’ stated capital currently stands at Rs.170,500,010.