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Indian Rayon to spin off division

Calcutta, Oct 14 (PTI): Aditya Birla group company Indian Rayon and Industries Limited has decided to spin off its insulators division into a separate joint venture company with NGK Insulators Ltd of Japan to emerge as a leading global player in the business.

As per the scheme of arrangement, Indian Rayon’s Jaya Shree Insulator division with an installed capacity of 34,000 tonnes per annum would be divested to a new company—Vikram Insulators Pvt Ltd. Vikram Insulators in turn would form a joint venture with NGK Insulators, to be named ‘Birla NGK Pvt Ltd’ in which both Indian Rayon and the Japanese company would hold 50 per cent each, with equal board representation.

Explaining the rationale behind the move, Indian Rayon sources said: “With the increased and complex demands of the power transmission system, the quality and technical requirements of insulators have become more stringent. Jaya Shree Insulator and other companies in India don’t have the technical capability of high quality and precision manufacturing,” they said.

Sources said NGK was the undisputed global leader in the insulator business with an about 60 per cent share of the world market of high-rated insulators for ultra high voltage power system and requisite technology for manufacturing high strength insulators for overhead transmission lines.

The joint venture would help in upgrading the quality of Jaya Shree and develop new and more technically advanced insulators, the sources said. Indian Rayon on the other hand had an “insignificant” share of the world market of insulators and did not possess the experience and technology to produce high rated insulators for which there was large global demand.

The company has convened an extraordinary general meeting on October 28 as per the Gujarat High Court’s order to get shareholders’ approval for the scheme of arrangement with Vikram Insulators.

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