MUMBAI, FEB 5: 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 Private Ltd, Birla Bombay Private Ltd and Godavri Corporation - all promoted by the Yash Birla group.Zenith Ltd, 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 carried out shortly and the group has already centralised the purchasing activities as a prelude to the sale.
The offer to pick up 20 per cent of the shares of face value Rs 10 each of RMIL is being made at a price of Rs 1.50 per share. The company has making losses for the past two and half years and the share is infrequently traded. As per the public announcement for the offer, RMIL has no earnings per share andreturn on net worth. The P/E also cannot be calculated. The book value per share is Rs 7.41 as per the September 1997 results. The offer price is 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 future. Presently only Birla Bombay holds 3.50,000 equity shares of RMIL at present. These shares were also picked up at Rs 1.50 per share in the twelve 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.
The Yash 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.
The transfer ofIndian Tools to Dagger Forst also dovetails with the 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.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
