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Jyoti Structures Financial Expansion: Issues Warrants and Equity Shares On A Preferential Basis

17 November 20236 mins read by Angel One
The issuance of share warrants and preferential equity shares is a sign of JSL's proactive approach to capital raising and investor engagement.
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Jyoti Structures Limited (JSL), a leading provider of turnkey/EPC projects in the field of power transmission, has recently announced the issuance of share warrants and equity shares on a preferential basis. This strategic move is aimed at fostering growth, providing employee incentives, and enhancing investor participation. The company’s global presence and capabilities make it a trusted partner for power transmission projects worldwide.

What are these instruments?

Share warrants, also known as stock warrants, are financial instruments that convey the right, but not the obligation, to purchase a company’s shares at a predetermined price (strike price) within a specified timeframe (expiry date). Warrant holders gain the opportunity to benefit from potential increases in the value of the underlying shares without incurring the full cost of acquiring them outright.

Why do companies choose to issue warrants?

  • Employee Rewards and Investor Attraction: Warrants serve as a means for companies to reward employees and involve them in the firm’s growth. Additionally, they act as an attraction for investors. Given that warrant prices are significantly lower than share prices, investors can opt for warrants when they lack sufficient capital to purchase an equivalent share volume.
  • Investor Flexibility: From an investor perspective, believing in a company’s growth narrative allows staying invested by paying a nominal price without the obligation to invest further if circumstances take a negative turn.

Jyoti Structures’ board of directors has recently approved several key initiatives to enhance the company’s financial standing:

  1. The board approved a resolution for fundraising up to Rs 400 crore, involving various instruments like equity shares, convertible preference shares, debentures, rights issues, private placements, or preferential issues. This is subject to necessary approvals, including shareholder consent.
  2. An Extraordinary General Meeting (EGM) has been scheduled to discuss and seek approval for these fundraising activities.
  3. Issuance of Warrants Convertible into Equity Shares on Preferential Basis: The board has greenlit the issuance of up to 6,07,50,000 convertible warrants through a preferential issue. Each warrant allows the warrant holder to apply for and be allotted one equity share at a face value of Rs. 2 each within eighteen months from the date of warrant allotment. The convertible warrants come with a premium of Rs. 11.20/- per equity share, aggregating to Rs. 80,19,00,000/-.
    • Convertible Period: The convertible warrants will be eligible for conversion within 18 months from the date of allotment into one equity share at a premium of Rs. 11.20 per warrant.
    • Lapse of Unexercised Warrants: If a warrant holder does not exercise the warrants within the stipulated 18-month period, the unexercised warrants shall lapse, and the amount paid by the warrant holders on such warrants shall stand forfeited by the company.
Name of the allottee Number of securities
Ruchi Gupta 30,00,000
RSP Ventures 50,00,000
Mayank Subhash Rathod 25,00,000
Mangala Subhash Rathod 25,00,000
Saajan Subhash Rathod 25,00,000
Sahi Trading Pvt. Ltd. 25,00,000
Shakun Impex Pvt. Ltd. 50,00,000
Bengal Finance & Investment Pvt. Ltd. 1,80,00,000
Ashish Kacholia 1,80,00,000
Sanjeev Aggarwal 7,50,000
Gajanand Agrawal 10,00,000

 

  1. Issuance of Equity Shares on Preferential Basis: The board has given the green signal for issuing equity shares with a face value of Rs. 2 per share at a premium of Rs. 11.20 per equity share on a preferential basis. This involves issuing up to 1,34,00,000 equity shares in one or more tranches, aggregating to Rs. 17,68,80,000.

Following is the Table illustrating the pre and post-issue shareholding structure of proposed allottees

Name of the Proposed Allottee Category Pre-Issue Shareholding Structure Post-Issue Shareholding Structure
Number % of shares Number % of shares
Ruchi Gupta Non-Promoter 20,00,000 0.26%
RSP Ventures Non-Promoter 25,00,000 0.32%
Bengal Finance & Investment Pvt. Ltd. Non-Promoter 44,00,000 0.56%
Ashish Kacholia Non-Promoter 44,00,000 0.56%
Gajanand Agrawal Non-Promoter 1,00,000 0.01%

In conclusion, Jyoti Structures is strategically leveraging the issuance of warrants and preferential equity shares to enhance its financial position. These financial instruments not only facilitate capital generation but also serve as attractive opportunities for investors and employees to participate in the company’s growth. The comprehensive approach of issuing both underscores the company’s commitment to optimising its capital structure and fostering future growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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