MUMBAI, February 5: Yashovardhan Birla has taken up a group recast programme through an intra-group sale of the tools division, a planned exit from the synthetic textiles business, and growth in chemicals through a joint venture with Everlite group.Zenith Ltd, the Yash Birla group flagship, is all set to generate a vital cash inflow of Rs 14 crore through a strategic sale of a division, Indian Tools, to associate Dagger Forst. The sale of Indian Tools to Dagger Forst will be carrried out shortly and the group has already centralised the purchasing activities as a prelude to the sale.
The transfer of Indian Tools to Dagger Forst also dovetails with group synergy, because Dagger Forst manufactures machine tools, the main product of the tools division being transferred.
The group is in the process of finalising its plans to set up a joint venture company in association with Everlite. Everlite is expected to pick up 50 per cent in the venutre for the manufacture of dye intermediates.The restructuring willsee Vardhan Syntex, a division of the flagship, Zenith, engaged in the manufacture of synthetic yarns, on the block. ``We do not see any potential for textile business in the long run due to acute recession and violatility in the fibre prices. Hence the sale of the textile division cannot be ruled out,'' a senior offical of the group told The Financial Express.
The turnover of Vardhan Syntex for the year 1996-97 is Rs 25 crore. The group has also presented a plan to the financial institutions for the conversion of cumulative convertible preference shares (CCPS) into equity which will allow better returns for their investments in its flagship. The FIIs are meeting on February 10 to take a final decision on the matter.
As per the plan, the group has asked the FIIs and banks to allow promoters to convert part of their CCPS and 25 per cent of the other CCPS into equity and balance in redeemable preference shares to be redeemed in three equal instalments at the end of the third, fourth and fifthyear.
This will allow them to rake in better returns for their investments and at the same time allowing the promoters' stake to go up by 10 per cent, which should not be offloaded to the market, according to the official.
Three options have been given for the conversion of promoters CCPS which include 100 per cent conversion of promoters' equity, 75 per cent and 60 per cent. Under the first option, the promoters will hold 49 per cent, banks and FIs will hold 31 per cent and the public will have 20 per cent and the total equity will be Rs 19 crore after the conversion. The second option will see the promoters holding 44 per cent, public having 21 per cent and banks and FIIs holding 35 per cent. The total equity in this case will be Rs 16 crore.
The group is in the process of finalising a programme to rationalise human resource development activities. The employess will be utilised efficiently by shifting them from one company to another depending upon the need. Zenith Ltd, engaged in the manufacture ofsteel pipes, H-Acid, (dye intermediaries) and cutting tools has staged a major recovery and posted a net profit of over Rs 3 crore for the first half of the current fiscal.
May take over Rathi Mercantile Industries
The Yash Birla Group of Companies is proposing to take control of the loss-making Rathi Mercantile Industries (RMIL). An open offer to the public shareholders of these companies has been made by Kashi Prasad Chokhani, Asian Distributors, Birla International Pvt Ltd, Birla Bombay Pvt Ltd, and Godavri Corporation, all promoted by the Yash Birla group. The offer to pick up 20 per cent of the shares of face-value Rs 10 each is being made at a price of Rs 1.50 per share.
The company has been making losses for the past two and half years and the share is infrequently traded. As per the public anouncment for the offer, RMIL has no earnings per share and retrun on networth. The P/E also cannot be calculated. The book value per share is Rs 7.41 as per the September-1997 results. The offer priceis equivalent to the negotiated price of Rs 1.50 per share.
The offerors intend to diversify their present activities, through this offer. On acquisition, they intend to strengthen the company further through better managerial inputs and expansion and diversification in the future.
Currently only Birla Bombay holds 3.50,000 equity shares of RMIL. These shares were also picked up at Rs 1.50 per share in the 12-month period prior to the date of the offer.The offer will remain open from March 27 to April 25, 1998. It will be available to all shareholders who are on the register of the company as on February 27.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
