The Hindu : Nirma board approves scheme of arrangement

Online edition of India's National Newspaper
Saturday, Mar 22, 2003

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Business

Nirma board approves scheme of arrangement

By Our Staff Correspondent

MUMBAI MARCH 21. The promoters of Nirma have transferred the brands and trademark from the promoter-held company Nirma Industries Limited (NIL) into Nirma Ltd., the listed company, along with its soapstone manufacturing business. Nirma and its various brands are at present held by the promoters in their closely held company (NIL) and licensed to Nirma Ltd. and its wholly owned subsidiary Nirma Consumer Care Ltd.

In consideration, Nirma will issue 6 per cent redeemable preference shares of a total value of Rs 2.8 crores to NIL. Nirma Ltd. will also undertake to service the liabilities of the operating division amounting to Rs 442 crores (as on February 1, 2003).

Following the demerger of Nirma Industries that will be effective from February 1, 2003, its operating division, comprising Nirma, Nima, other brands, trademarks and other assets related to soap stones business, will now be transferred to Nirma Ltd. The board of directors of the two companies, in separate meetings, have approved the scheme of arrangement that will be submitted to the High Court in Gujarat for approval. post demerger, Nirma Industries Ltd. will retain with it investments, financial assets and other assets.

According to the company, domestic and international capital market analysts were of the view that on account of brands not held by Nirma, a listed company, the real value of the company was not assigned by the markets. With the proposed merger of the operating division, Nirma will own the brands and trademarks and will no longer have to pay royalty.

Deloitte Haskins and Sells, have in their interim report, valued the brands and trademarks in the range of Rs 1,400 crores to Rs. 1,600 crores considering the capitalisation of royalty, whereas the merger considers only the book value of the assets being transferred which totals Rs. 445 crores.

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