Auto Rubbers is a closely held company with a paid-up capital of Rs 11.66 lakh and a net worth of Rs 74.36 lakh as against Srichakra's paid-up capital of Rs 7.18 crore and net worth of Rs 20 crore.

Performance-wise, too, Srichakra is by far the better company with a turnover of Rs 134.65 crore (1997-98), while Auto Rubber's turnover is a mere Rs 5 crore. Srichakra's net profit stood at Rs 7.45 crore last year while Auto Rubber's net was Rs 20 lakh.

Auto Rubber manufacturers phenolic knobs which are exported to the European market and this constitutes about 50 per cent of the company's turnover, with the remaining coming from manufacturing and selling rubber and plastic products in the domestic market. According to Srichakra,the amalgamation will give the company a toehold in the European market for the export of industrial tyres.

But even then the price looks extremely high considering that the promoters of Auto Rubbers will get close to Rs 15 crore at the current market price of Rs 32.50 per share for a company whose turnover is only a third of the sale consideration.

The share swap ratio seems to be unfair to the shareholders of Srichakra Tyres and would only seek to increase the stake of the promoters. None of the top officials of Srichakra were available for comment as they were travelling abroad.