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Boards okay merger of three Arvind companies

The boards of Arvind Polycot Limited, Arvind Cotspin Limited and Arvind Intex Limited in separate meetings on January 24, 1999 at Ahmedabad have approved the proposal to merge the three companies with retrospective effect from October 1, 1998 into Arvind Products Limited, a small wholly owned subsidiary of Arvind Mills Limited.

The share exchange ratio approved by the boards was based on the recommendations of two leading independent valuers, Bansi S Mehta and Company, and C C Chokshi and Company.

The share exchange ratio is as follows: one share of Arvind Products is issued for every one share held in Arvind Polycot, five shares of Arvind Products for every seven shares of Arvind Cotspin and four shares of Arvind Products for every seven shares of Arvind Intex. The existing preference shares of these three companies will continue as such in Arvind Products Limited.

In determining the share exchange ratio, the valuers have adopted commonly applied methods and rules of guidance upheld in India, such as net asset value, profit earning capacity value based on past results and also projected working results, and market price.

The merger will be subject to necessary approvals by shareholders, institutions and confirmation of the scheme of merger by the high court of Gujarat. The shares of Arvind Products are proposed to be listed on major stock exchanges after the necessary approvals.

Post merger, the share capital of Arvind Products will be Rs 808.3 million, and the Arvind Mills Limited will hold 54 per cent of the enhanced equity capital in the merged company, Arvind Products, retaining it as an Arvind Mills subsidiary. The balance equity capital will be held by financial institutions and public.

As a measure of proactive and progressive corporate governance, Arvind Mills proposes to present consolidated financial statements to its shareholders in addition to the statutory financial statements for the year 1999-2000 which would be the first full year of operations of Arvind Products, its subsidiary.

The consolidated financial statements will be able to present the strengths and operations of the group in a more effective way to its stakeholders. The merger will strengthen the balance-sheets of both Arvind Products and Arvind Mills by capturing the intrinsic synergy between cotton yarn, gaberdine and denim.

Arvind Products is expected to post over Rs 5 billion in sales in 1999-2000. Arvind Products, which presently does not carry on any business, will have three businesses -- gaberdine (shortly being commissioned) voiles and production of cotton yarn.

All the existing employees of the three companies will be absorbed into Arvind Products.

UNI

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