CALCUTTA, February 13: Bishnauth Tea of the BM Khaitan-controlled Williamson Magor group has decided to merge two of its subsidiaries with itself. The restructuring plan is expected to be approved at the company's board meeting being held next week.An official said the company is merging subsidiaries Rupajuli Tea Company (India) Ltd and Niagara Investment Company with itself.
After the company gets the board approval, it would seek the approval of a court-appointed chairman and then the shareholders' approval to the proposed amalgamation.
If approved, the merger would be effective retrospectively from April 1, 1997. The proposed merger forms part of a major restructuring exercise undertaken by the Rs 2,000-crore Magor group to re-define its entire business structure.
The official said the merger would increase the asset base of the holding company, which in turn would enable further growth and development of the group businesses.
The two subsidiaries are primarily investment companies dealing inshares and securities and also providing finance. With more stricter prudential norms set for non-banking finance companies by the Reserve Bank of India, the tea major wants to move away from such activities.
According to an official, the amalgamation would help reduce overhead costs and administrative and procedural work thus leading to optimising productivity in operations. It would also provide a number of advantages in terms of raising capital as well as streamlining accounts apart from saving on interest costs and other benefits, the official said. The tea major had taken a Rs 7.5 crore loan from Industrial Development Bank of India to increase its volume of business.
Bishnauth Tea, which recorded a sales turnover of Rs 134.45 crore in 1996-97, had an export turnover of Rs 51.2 crore during the period. Its net profit for the year ended March 31, 1997 went up 31 per cent to Rs 6.87 crore.
During 1996-97, the company incurred a capital expenditure of Rs 3.62 crore for upgradation and modernisation offactories. This followed soon after holding company Williamson Magor & Company merged with itself two of its subsidiary companies -- Fairlie Place Services Ltd and Dirai Investments Ltd-- in November 1997.
The Khaitans were planning to widen the scope of activities of Williamson Magor, which included consultancy services and agency business too. The Williamson Magor businesses comprise trading and investment in shares and securities as well as real estate activities. Williamson Magor became a holding company following the transfer of its tea business to group companies in 1994, when it transferred seven tea estates to group company Bishnauth Tea and the Darjeeling garden to McLeod Russel, now merged into Eveready Industries India Ltd.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
