Financial Daily from THE HINDU group of publications
Sunday, Apr 20, 2003
Financial Daily from THE HINDU group of publications Sunday, Apr 20, 2003 |
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Corporate
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Mergers & Acquisitions Boards okay Harrisons rubber division merger with Ceat Our Bureau
MUMBAI, April 19 THE process of consolidating the rubber business of the Rs 6,700-crore RPG Enterprises got under way with the boards of Ceat Ltd and Harrisons Malayalam Ltd (HML) approving the scheme of arrangement involving the demerger of the rubber division of HML and its transfer to Ceat. The appointed date of the Scheme of Arrangement is fixed as October 1, 2002. Under the demerger plan for HML, Ceat will issue 95,03,900 equity shares of Rs 10 each to HML and 36,91,081 equity shares of Rs 10 each to the shareholders of HML in the ratio of one share for five equity shares held by these shareholders. The existing paid-up capital of HML will be reduced from Rs 18.45 crore to Rs 9.23 crore by reducing the paid-up value of each equity share of Rs 10 each to Rs 5 each. Besides, Ceat's investment portfolio will be demerged and transferred to Meteoric Industrial Finance Company (MIFL), one of Ceat's non-banking financial subsidiaries. Under this demerger, MIFL will issue 3,52,13,320 equity shares to shareholders of Ceat in the ratio of one equity share of MIFL of Re 1 each for every one equity share of Ceat of Rs 10 each held by such shareholders in Ceat. This scheme will provide reclassification of the unissued equity shares of Rs 10 each of MIFL into equity shares of Re 1 each. Post this issue of shares, MIFL will cease to be a subsidiary of Ceat and an application will be made to the Bombay Stock Exchange for listing the company. The objective of this consolidation is to strengthen the rubber business by creating backward integration for Ceat, an official press release said quoting Mr Harsh Goenka, Chairman, RPG Enterprises. "With the merger of HML's rubber division and the divestment of all its non-tyre assets Ceat will be able to focus on its tyre business and also improve its option for sourcing this important raw material for its tyre manufacturing activities and bring about synergistic effects,'' RPG Enterprises said in the press release. Ceat had earlier said that the merger of the rubber division of HML with itself would improve the company's options for sourcing this important raw material for its tyre manufacturing activities and bring about synergic effects. HML's rubber division has a turnover of Rs 50 crore from a crop output of about 10,000 tonnes per annum, while Ceat's natural rubber consumption was approximately 50,000 tonnes worth Rs 260 crore last year. As regards HML, the demerger of the rubber division will help it to focus on its core business area of tea. The financial restructuring would enable the business to grow not only its tea business but also consider expansion into new agriculture related food products. The Board of HML also gave its approval for a scheme of amalgamation of its 100 per cent subsidiaries, Harrisons Agro Products Ltd, Harrisons Rubber Products Ltd and Harrisons Malayalam Financial Services Ltd with itself. The valuers to the Scheme are SBI Capital Markets & KPMG and the advisors are Lodha & Co. The scheme is subject to the sanction of the courts and the National Company Law Tribunal. Ceat, MIFL and HML and its subsidiaries will apply to the High Courts for approval. Khaitan & Co has been appointed as advocates to the scheme for this purpose.
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