Max India to split into three separate companies

Demerges into three business verticals

January 27, 2015 03:53 pm | Updated January 28, 2015 12:46 am IST - CHENNAI:

B.LINE: Analjit Singh is the Founder & Chairman of Max India Limited shows ink mark on his finger after voting outside a polling station, in the Capital on Dec. 4, 2013.
Photo:Kamal Narang

B.LINE: Analjit Singh is the Founder & Chairman of Max India Limited shows ink mark on his finger after voting outside a polling station, in the Capital on Dec. 4, 2013. Photo:Kamal Narang

The board of Max India Ltd., on Tuesday, approved a corporate restructuring plan to vertically split the company through a de-merger into three separate listed companies. It also approved divestment of its clinical research business, the company said in a notification to BSE.

The appointed date for the de-merger is April 1, 2015, and the de-merger is expected to be completed within the next six-to-nine months.

Upon completion of the de-merger, the existing company — Max India Ltd. — is proposed to be renamed as Max Financial Services Ltd. (MFS). And, it will focus solely on life insurance activity through its 72.1 per cent shareholding in Max Life, making it the first Indian listed company exclusively focussed on life insurance.

It is proposed to name the second vertical as Max India Ltd., which will continue to manage investments in the high potential health and allied businesses.

The third vertical will house the investment activity in the group’s manufacturing subsidiary, Max Speciality Films, an innovation leader in the speciality packaging films business, and will be named as Max Ventures and Industries Limited (MVIL).

The company has also initiated action for the divestment of its entire 100 per cent stake in the clinical research business. Max Neeman entities in India and in the U.S. are proposed to be divested to a Canadian contract research organisation, JSS Medical Resarch, for a consideration of $1.5 million.

Once the de-merger scheme is effective, after due regulatory approvals, Max India’s shareholders will retain one equity shares of Rs.2 in Max Financial Services Ltd. and will additionally get one equity share of Rs.2 each of Max India Ltd. for every one equity share of Rs.2 each held in Max Financial Services and one equity share of Rs. 10 each of Max Ventures and Industries Ltd. for every five equity shares of Rs.2 each held in Max Financial Services.

Max India currently has cash reserves of Rs.605 crores as on December 31, 2014. It is proposed to split the cash reserves as on appointed date of April 1, 2015, between the three listed companies such that Max Financial will hold Rs.150 crore, Max Ventures Rs.10 crore and the balance, likely to be over Rs.400 crore, by the newly-formed Max India Ltd.

Management The top leadership of Max India — Analjit Singh (Chairman), Rahul Khosla (Managing Director) and Mohit Talwar (Deputy Managing Director) — will continue in their roles, and upon de-merger, will continue to hold appropriate roles in the de-merged entities of the Max group.

Explaining the rationale for the demerger, Analjit Singh, Chairman, Max India, said “Our bouquet of businesses is diverse, but each has considerable value and growth potential. This de-merger will provide investors with a choice to continue to be associated with all these businesses, or only specifically invest in the set of businesses that suit their respective investment philosophy.”

Stock surges 11 per cent Shares of the company closed at Rs.492.75, up by 8.4 per cent on BSE.

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