Andrew Yule & Co has, at an extraordinary general meeting, secured shareholder-approval to transfer the entire business of the belting division of the company to the new joint venture firm, Phoenix Yule Pvt Ltd.
The company also secured shareholder approval for investing up to Rs 14 crore in the joint venture.
The assets will be transferred between October 1 and October 15.
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Andrew Yule & Co signed a memorandum of understanding (MoU) with Phoenix AG of Germany in April with regard to the formation of a joint venture with equity participation of 74 per cent by Phoenix and 26 per cent by Andrew Yule.
Addressing the shareholders, the chairman of the company, Sujit Chakraborty, said, "The belting division has been incurring losses of Rs 7 crore per annum on an average. With the formation of the joint venture, Andrew Yule's profitability will not be upset by the losses of the belting division any longer."
This has been one of the most important achievement for the company, the chairman revealed. The accumulated loss of the belting division till March 1998 was Rs 37 crore, Chakroborty pointed out.
The belting division, engaged in the manufacture of textile and steel cord conveyor belting, automotive fan and vee belts, suffered due to the severe working capital constraints, liberalisation of imports, sluggish demand in capital goods and inadequate government investment in core sectors.
However, the price for the business assets has been finalised at DM 23 million.
The conversion of DM into Indian rupees will be made at the prevailing exchange parity rate within the band of Rs 19.50 to Rs 23.
The firm price at the average rate works out to Rs 49.2 crore.
Phoenix possess the latest technical know-how for manufacturing textile and steel cord conveyor belting and has its operations in the United Kingdom, France, Hungary, the US, Spain and Belgium besides Germany.