Mumbai, March 21: The board of Nirma Ltd (NL) today approved the merger of soap stone manufacturing activities and brand division of Nirma Industries Ltd (NIL) with the company. Nirma Ltd will issue 15 non-convertible preference shares of Rs 100 each for every single Nirma Industries’ fully paid-up equity share of Rs 100 face value.
According to the scheme, all assets and liabilities relating to these two divisions of Nirma Industries would vest with the company with effect from February one, 2003, the proposed appointed date for the restructuring, Nirma Ltd informed the Bombay Stock Exchange.
In consideration for such a transfer, the company would issue six per cent non-cumulative non-convertible preference shares of Rs 100 each.
The scheme is subject to the approval of the requisite majority of shareholders of both companies and Ahmedabad High Court.
Nirma Ltd will also undertake to service the liabilities of the operating division amounting to Rs 442 crore (as on February 1, 2003), the company said.
Deloitte Haskins and Sells has valued the brands and trademarks in the range of Rs 1400 crore and Rs 1600 crore considering the capitalisation of royalty, whereas the merger considers only the book value of the assets being transferred which totals Rs 445 cr.
“It is therefore apparent that the terms of the merger are value accretive to Nirma Ltd and its stakeholders,” the company said.
Nirma and its various brands are currently held by the promoters in their closely held company and licensed to Nirma Limited and its wholly-owned subsidiary Nirma Consumer Care Limited.
Both local and international capital market analysts were of the view that on account of brands not held by Nirma Ltd, a listed company, real value of the company was not assigned by the markets.
With the proposed merger of the operating division, Nirma Ltd will own the brands and trademarks and will no longer have to pay royalty.
Post demerger, Nirma Industries Limited will retain with investments, financial assets and other assets.
Nirma is seen as a distinct example of successful Indian entrepreneurship.
The journey of Nirma, which began as a one-man operation in 1969 with Karsanbhai Patel, to a company with a turnover of Rs. 2500 crore, has been part of Indian corporate folklore.