Synthetics India Ltd (IRSIL) has decided to separate its spun yarn
and polyester businesses as two separate companies apart from
restructuring the share capital of the company.
The board of directors of
the company at its meeting held today has approved the draft
scheme of separation of its spun yarn and polyester businesses as
two separate companies and restructuring the share capital of the
Accordingly, the spun
yarn business of the company will be segregated into a new company
by way of a demerger under section 391-394 of the Companies Act,
1956, through an order of the court.
The spun yarn business
will be transferred to Indo Rama Textiles Ltd (IRTL) on a going
concern basis, with effect from the appointed date (1 April 2002).
The polyester business, including draw texturised yarn, shall
remain with the company IRSIL. The equity share capital of the
existing company IRSIL will be split in the ratio of 80:20 between
the existing company and the new spun yarn company IRTL.
The equity shareholders
of the new company IRTL (spun yarn business) will have the option
to convert their equity share into a redeemable preference share
of Rs 10 (redeemable at a premium of Rs 20). The redemption shall
be in two instalments of 25 per cent and 75 per cent of the total
value at the end of six and 15 months, respectively, from the date
of completion of all formalities as required by the law. The
coupon rate on preference share shall be 0.1 per cent.
The equity shareholders
of the existing company will have the option to convert their
equity share into a debenture of Rs 10 (redeemable at a premium of
Rs 20). The redemption shall be in two instalments of 25 per cent
and 75 per cent of the total value at the end of six and 15
months, respectively, from the date of completion of all
formalities as required by the law. The coupon rate on the
debentures shall be 0 per cent.
In both the cases the
amount of conversion shall be restricted to 20 per cent of the
equity share capital of the respective companies (prior to the
conversion). In the event of optional conversion exceeding 20 per
cent of the equity capital, the shareholders will be allotted the
preference shares and debentures on a pro rata basis.
As an integral part of
the restructuring, the accumulated losses appearing in the balance
sheet of the company as on 31 March 2002 amounting to Rs 1,498.30
million shall be written off against the balance in the share
premium account of the company.
With effect from the
appointed date, all properties, estates and interest of the
company in spinning business shall be transferred to and vested in
IRTL on a going-concern basis subject to all existing charges,
mortgages etc, and all properties of spinning business shall
become the property of the transferee company IRTL.
All the permanent
employees of IRSIL shall be engaged by IRTL as on the appointed
date without interruption of services and shall be eligible for
all retirement benefits, including provident fund and gratuity, to
which they would have been eligible in IRSL.
All legal or other
proceedings by or against IRSIL relating to the spinning business
shall be enforceable by or against IRTL after the appointed date.
All assets and liabilities as drawn up in respect of both IRSIL
and IRTL shall be vested in the respective companies after the
appointed date upon the scheme becoming effective.
of liabilities on account of debts shall be as per the valuation
report. The above demerger shall be subject to the approval of the
shareholders, and lenders and creditors of both the companies and
shall be approved by the high courts of Madhya Pradesh and Delhi.
exercise is expected to facilitate faster growth of both
businesses, enhance shareholders value, reduce cost of capital and
improve service to all stakeholders including lenders.