HGI Industries, the Aditya Birla group company, will seek shareholders' approval at its annual general meeting on May 30 to a resolution enabling the company to `amalgamate, merge and de-merge' its businesses with other firms of similar business interest.
Though the city-based company's steel files and foundry divisions are not doing well, K L Sharma, the company secretary, HGI Industries, said, "We do not have any merger or de-merger plans at present. We want to incorporate the terms `merge and de-merge' in our memorandum and articles of association. We need to have these options open for future eventualities."
The company's performance in the year ended March 31, 2000, has suffered on account of the poor results recorded by its steel files and foundry divisions. Its turnover was down to Rs 47.18 crore from Rs 51 crore in the previous year. Gross profit slipped by nearly 39 per cent from Rs 4.02 crore to Rs 2.46 crore.
Despite the unimpressive results, the company has declared a 15 per cent dividend on its 37.87 lakh shares of Rs 10 each.
The company ascribes the poor performance of the steel files division to the general recession in the domestic and global markets. This, the company says, resulted in poor off-take and increase in costs, squeezing operational margins.
The company's foundry division is also in trouble due to the recessionary conditions prevailing in the consumer industries such as insulators and automobiles, and lower off-take by the Railways.
Also contributing to its difficulties was rise in input costs.
The only division which the company is comfortable with is the nitrogen unit. The division has achieved a 107 per cent capacity utilisation which went up to 124 per cent on occasions.
The capacity of the plant has been increased 20 per cent during the year. Sharma indicated that the company may have to expand it further to meet market demands.
Meanwhile, HGI Industries has appointed two additional directors to its board. According to Sharma, this, and the amendment to the memorandum of articles, are part of its structural improvement.
The company intends to implement the recommendations of the Kumar Mangalam Birla committee recommendations on corporate governance in the current year, he added.
