The board of directors of IVRCL Ltd has approved a share-swap deal for the scheme of amalgamation with its group company IVRCL Assets and Holdings Ltd. Following the valuation, the shareholders of IVRCL A&H will receive five fully paid-up equity shares of Rs 2 each in IVRCL for every six shares of Rs 10 each held on the record date to be fixed as per the Listing Agreement.
At present, IVRCL holds 75.72 per cent of the equity share capital of IVRCL A&H, which will be cancelled.
Upon the scheme becoming effective, the issued and paid-up share capital of the company would increase from 267,009,858 fully paid equity shares of Rs 2 each to 306,887,273 fully paid equity shares of Rs 2 each, an increase of 3.98 crore shares of Rs 2 each.
To improve synergies
The company's board decided on the merger to achieve synergetic integration and consolidation of the businesses being carried on by the amalgamating company (IVRCL Ltd) and the amalgamated company (IVRCL A&H). The company believes this move will be beneficial to the shareholders, creditors and employees of the companies .
After considering the Valuation Report, including the share-swap ratio prepared by SSPA & Co. Chartered Accountants, and the Fairness Opinion submitted by IDFC Capital Ltd, the board unanimously approved the Composite Scheme of Arrangement for merger of IVRCL A&H into IVRCL and for the de-merger of the tower manufacturing business into a separate wholly-owned subsidiary company and the real-estate business into another wholly-owned subsidiary company.
The draft Composite Scheme of Arrangement has to also be approved by the shareholders and creditors of the respective companies, the Competition Commission of India (CCI), the Andhra Pradesh High Court and all other requisite statutory and regulatory authorities. The appointed date for the amalgamation is April 1, 2011, or such other date as may be fixed by the High Court.
Performance
IVRCL and its listed subsidiaries recorded an aggregate turnover of Rs 1,421 crore in the second quarter ended September 30, 2011, against Rs 1,451 crore in the corresponding period last year.
The company stated that it has an order book of Rs 25,600 crore, which include orders in which the company has been declared lowest (L1) bidder.
Hindustan Dorr Oliver, the engineering subsidiary of IVRCL, saw a significant drop in its net profit at Rs 2.80 crore for the second quarter ended September 30 as against Rs 20.58 crore for the corresponding quarter last year.
The revenue for second quarter was down at Rs 148.76 crore as against Rs 243.82 crore.
IVRCL A&H has incurred a loss of Rs 76.56 crore for the second quarter in spite of significant growth in its turnover at Rs 225.72 crore as against Rs 132.50 crore during the corresponding quarter previous year.
The company attributed the loss to interest on borrowings.