If the Distressed Gentle Folks Aid Association gave money to companies instead of just the genteel poor, Royal Doulton would surely qualify.

Queen Victoria remarked approvingly on products from Minton, now part of the Royal Doulton stable, at the Great Exhibition in 1851. The present Queen and Prince Charles are among today's fans.

But Royal Doulton, the ceramics and giftware business with a 200-year corporate bloodline, is a penurious aristocrat. It has chalked up losses every year for the past four years. Without the rescue rights issue set up this month, it would have faced financial collapse this summer.

The business's fair-weather following in the City has melted away, leaving it supported by a hard core of faithful institutions. In fact, this week Waterford Wedgwood, which held 15 per cent of Royal Doulton, increased its shareholding by 5.66 per cent.

Today Royal Doulton will hold an extraordinary general meeting of shareholders to approve an £18.9 million (€30.9 million) three-for- one rights issue. This would have reduced Waterford's previous 14.9 per cent stake to less than 4 per cent. Royal Doulton will need 75 per cent approval from its shareholders for the rights issue if it is to go ahead. It is not clear if Waterford will vote against the issue. If the issue does not go ahead Royal Doulton will have to renegotiate its facilities and the company says the group is "unlikely to be viable."

Royal Doulton's market capitalisation has tumbled from £300 million sterling (€492 million) in 1996 to £10 million today, less than half its debts of £24.3 million, and a quarter of its net assets of £42.9 million.

Mr Hamish Grossart, the rumbustious company doctor, says it is his toughest turnaround. He was parachuted in as chairman by institutions in 1998. He had predicted recovery - for which, read profits - in 2002. But analysts now believe a respectable bottom line out-turn is unlikely until 2004.

"They asked me to take the job twice, and twice I refused," says Mr Grossart. "The third time I said 'Och, I'll give it a go'."

Mr Grossart was horrified by what he found when he took over.

In the late 1990s, Royal Doulton was still stuck in a mindset that most British manufacturers had snapped out of a decade or more before.

Sales growth was the objective, because it allowed the business to utilise and increase capacity. That was regarded as fine, because a big organisation - with its attendant armies of workers and managers - was a good organisation.

A perplexing series of practices were thrown up by this philosophy. For example, in 1998 Costco, the US supermarket chain, was selling Royal Doulton products at prices lower than the British company was wholesaling them to Federated, the US department store business.

In Britain, Royal Doulton's 7,000 employees were producing vast amounts of goods that were inherently unprofitable because runs were so short. This was hard for managers to spot because internal reporting was so poor.

The company could, nevertheless, announce profits every year. This, says Mr Grossart, was thanks to optimistic accounting.

No provisions were made for writing off the value of stocks, accounted for on the balance sheet as assets, which were unsaleable, or could only be sold at a loss.

Profits were also supported by running an underfunded pension scheme.

Royal Doulton began to drift, observers say, towards the end of its ownership by Pearson, owner of the Financial Times.

When Pearson, pursuing focus, demerged Royal Doulton in 1993, "a group of subsidiary managers suddenly found themselves running a quoted company".

According to an old quip, the easiest way to create a small business is to start with a large one. That is just what Mr Grossart, and a new cadre of managers that includes finance director, Mr Geoffrey Martin, have been doing.

They have cut the workforce from 7,000 to 5,000, stocks from £73 million to £43 million, debts from £43 million to £24 million and product lines from 31,000 to 6,000.

The exercise - which has also involved increasing contributions to the pension fund to prevent a modest deficit becoming "a yawning chasm" - has cost the business a series of losses, most recently £21.2 million on sales of £165.8 million in 2001.

In 1999, the City primed the pump for the restructuring with £31.2 million by way of a placing and open offer.

But now Royal Doulton is raising another £19 million, through a fully sub-underwritten three-for-one rights issue, which shareholders are expected to approve at an extraordinary general meeting on March 8th.

The cash will allow Royal Doulton to reduce debt to £5.8 million. The banks have agreed to give £30 million in new financing. That, along with land sales expected to raise £10 million, will pay for £20 million in extra restructuring costs.

This will allow Royal Doulton to cut overheads by another 30 per cent, stocks by 25 per cent and the number of retail outlets from 400 to 300. Most controversially, Royal Doulton will cut staff numbers by 20 per cent to about 3,500.

The production of Royal Doulton's lower-priced Royal Albert range will move to Indonesia.

Some 100 retail outlets in Britain will drop the "Royal" from their names and become Doulton & Co. This is intended to highlight the fact that the company has two other important tableware brands, Royal Albert and, for top-end consumers, Minton.

But according to Mr Grossart there is another reason: "Don't quote me the next time you speak to the Royal family, but consumers under-40 do not regard 'Royal' on the front of a shop as a reason to come in."

This highlights a brand perception problem. In a static market for ceramics, sales of products with traditional, formal associations - Royal Doulton's strong hand - are falling.

The company hopes that by jazzing up its designs and becoming sharper at marketing and retailing, it can win more business in informal tableware.

But first, it must get its £18.9 million sterling rights issue through today.