The Havell's India board of directors today accepted the swap ratios proposed by PricewaterhouseCoopers (PwC) for the amalgamation of three group concerns into the company.
The Gupta family (the promoters) is merging closely-held companies Havell's Industries, ECS Ltd and the moulded case circuit breakers division of Crabtree India into the flagship, Havell's India.
As per the scheme presented by PwC, for every 10 shares they hold, shareholders of Havell's Industries will get 19 shares of Havell's India. And for every 32 shares they hold, ECS shareholders will get ten Havell's India shares. For the demerger of the MCCB division into Havell's India, Crabtree India shareholders will get one Havell's India share for nine Crabtree India shares.
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At present, the Gupta family owns 51 per cent stake in Havell's India. As both ECS and Havell's Industries are 100 per cent owned by the family, the promoter's shareholding after the amalgamation will rise to 58 per cent. At the same time, the stake of Geyer of Germany, the foreign collaborator, will come down from 15 per cent to 13 per cent, while the public shareholding will come down from 34 per cent to 29 per cent.
With the amalgamation, the share capital of Havell's India will rise from Rs 5 crore to Rs 5.8 crore. As both ECS and Havell's Industries have small debts on their books, the merger will also improve the debt equity ratio of Havell's Industries (over 2:1 as on 31 March 2001).
Subsequently, the Guptas plan to raise cash by doing an equity placement with some foreign institutional investors. "We are planning to raise around Rs 13-14 crore through the placement," Havell's India director Anil Gupta said, adding: "The placement will be at a premium to the existing share price of Rs 150." PwC is known to have valued the stock at Rs 190.
While Havell's India closed 2000-01 with a turnover of Rs 173 crore, Havell's Industries clocked a turnover of Rs 30 crore during the year, the MCCB division of Crabtree India did a business of Rs 12 crore and ECS did a turnover of Rs 6 crore.
Post-amalgamation, the Guptas expect Havell's India along with its subsidiaries to achieve a turnover of Rs 340 crore during the current financial year.