New Delhi, May 8: To strengthen Garden Silk Mills Ltd's networth, Garden Finance Ltd (GFL) and Garden Securities Ltd (GSL) will be amalgamated with Garden Silk. According to the company secretary of Garden Silk Mills (GSML), Kamalesh Vyas, one share of GSML of face value Rs 10 will be issued to the shareholders of Garden Finance for four shares of face value Rs 10 held in the latter.On amalgamation of Garden Finance with GSML, Garden Securities Ltd, a 100 per cent subsidiary of Garden Finance, will automatically be amalgamated with Garden Silk Mills. The promoter group holds a majority stake in GFL which is not listed.
GFL at present has an equity base of Rs 11.25 crore and a networth of Rs 37 crore. Although both GFL and GSL are into un-related fields of finance, the proposed amalgamation will help GSML have access to a sizeable finance base. Says Kamalesh Vyas, ``It would be in the interest of all the three companies as GSML will be able to access the sizeable finance base of the two transferrercompanies. Also, since all the companies have been managed by the same group, it makes sense to go in for an amalgamation if that results in considerable saving on expenditure, avoiding duplication of administrative works and reducing the legal formalities to a considerable a extend.''
The equity of GSML will be expanded after the amalgamation and this may dilute the future earnings. However, Kamlesh Vyas rules out any dilution of earnings. ``The amalgamation will bring in the benefits of a combined reserves, manpower and cash flows of two more entities'' says Vyas.
Garden Finance has been engaged in the field of investment and financial activities like car finance, ICDs, bill discounting, hire purchase, lease finance and fixed deposits.
Promoter group holds around 43 per cent in GSML. The balance is held by public (18 per cent), institutions (36 per cent) and NRIs (3 per cent).Garden Silk Mills belongs to the Garden Vareli group which is one of the leading manufacturers of synthetic textiles in thecountry. GSML is one of the largest manufacturers in India of high-fashion premium quality, dyed and printed textile fabrics. The company had commissioned its filament yarn plant with a capacity of 5,000 tpa in April 1994 in technical collaboration with Noy-Val Lesina Ag of Switzerland.
For the half-year ended December 1997, GSML's sales jumped to Rs 304 crore against Rs 129 crore in the corresponding period of 1996. Net profit has more than doubled to Rs 4.91 crore against Rs 2.18 crore during 1996.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
