Small and medium companies are trying to raise their borrowing limits and their equity bases.

A look at the outcome of extraordinary general meetings and annual general meetings reported by companies to the Bombay Stock Exchange between April 1, 2004, and August 12, 2004, shows that 19 small and medium companies have obtained shareholder approval to raise their borrowing limits.

Another 32 companies have reported that they are bringing equity capital into their balance sheets from fresh issues of shares and convertible and non-convertible preference shares. In all, these companies propose to increased their authorised capital by Rs 2,190 crore to Rs 5,531 crore.

Though very few companies have stated their reasons for seeking to raise their authorised capital or borrowing limits, the increase in the latter makes sense only in the context of undisclosed capital expenditure plans.

The few companies that have stated the reasons have asked for shareholder approval for higher borrowing limits to fund future working capital needs, to put up new facilities at existing plants, and because of a revision in the cost of projects and investments in subsidiaries.

A few companies are increasing their authorised capital to raise funds through preferential allotments of equity shares. Some of them are raising funds through a fresh issue of shares to the public or to foreign investors.

A few corporates propose to issue non-convertible/convertible preference shares to promoters and others. Tata Teleservices Maharashtra, for example, has increased its borrowing capacity from Rs 3,000 crore to Rs 4,000 crore in order "to capture a significant market share of the expanding mobile and wireless telephony market".

Funds are required for the expansion of its network to cover 150 towns and cities in Maharashtra and Goa. Simultaneously, it has proposed an expansion in its authorised capital from Rs 1,600 crore to Rs 2,500 crore to be able to offer foreign currency-denominated convertible bonds up to $150 million to foreign investors.

Welspun India has revised its project by adding 50,000 spindles to its existing capacity, and by adding a co-generation plant. These revisions have consequently increased the project cost from Rs 410 crore to Rs 498 crore, for which the company has obtained shareholder approval to raise its borrowing limit from Rs 450 crore to Rs 1,000 crore.

Ahmedabad Electricity has obtained shareholder approval to raise its borrowing limit to Rs 1,500 crore, which the company says is required "to facilitate expansion plans".

Birla Global Finance has increased its borrowing limit to Rs 1,500 crore, Noida Toll Bridge has increased it from Rs 400 crore to Rs 800 crore and Shree Cement has increased its borrowing power to Rs 750 crore.