Business
ITC to benefit by ITC Bhadrachalam's merger
By Our Staff Reporter
KOLKATA, DEC. 7. ITC chairman, Mr. Y. C. Deveswar, today said the merger of ITC Bhadrachalam Paperboards with the company would impact the balance sheet of ITC favourably. Also, the merger would help the paperboards business to compete with international players.
Addressing the `meeting of the members' ordered by the Calcutta High Court, following submission of the scheme of amalgamation, Mr. Deveswar said ``not only the earning per share (EPS) is expected to increase significantly, ITC would also enjoy the benefit of loss that ITC Bhadrachalam had incurred in the past". ITC Bhadrachalam had registered Rs. 35 crore net profit in 2000-01 after incurring loss in the previous three years. ITC would enjoy tax benefits out of the merger.
ITC had invested a substantial sum towards the modernisation of ITC Bhadrachalam's facilities in the last few years. Almost all of the latter's loan funds were sourced from the parent. Now the boards of both companies felt that it would be appropriate to reap the benefits through amalgamation, Mr. Deveswar said and added that following the merger, ITC Bhadrachalam would enjoy the financial muscle and infrastructural facilities of ITC.
As per the amalgamation scheme, ITC Bhadrachalam's shareholders will get ITC shares in the ratio of 16:1. Mr. Deveswar ensured that it would not be compulsory to dematerialise shares to get the merger benefits. Also he said fractional shares would be accumulated and then sold in the market. The realisation of the sale would be distributed among the concerned shareholders as per the ratio of their fractional holdings.
Today's meeting was convened to seek the approval of ITC shareholders towards the scheme of amalgamation. The results of the poll are expected to be announced tomorrow.
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