finally responded to the long-awaited demand of transferring
the brands and trademark from the promoter-held company
into Nirma Ltd, the listed company, along with its soap-stone
Nirma, the market
miracle of the 20th century, and its various brands are
at present held by the promoters in their closely-held
company and licensed to Nirma Ltd and its wholly-owned
subsidiary Nirma Consumer Care Ltd.
Both domestic and
international capital market analysts were of the view
that on account of brands not held by Nirma Ltd, a listed
company, the real value of the company was not assigned
by the markets. With the proposed merger of the operating
division, Nirma Ltd will now own the brands and trademarks
and will no longer have to pay royalty.
Pursuant to a scheme
of demerger of Nirma Industries Ltd (NIL) that will be
effective from 1 February 2003, its operating division,
comprising Nirma, Nima, others brands, trade marks and
other assets related to the soap-stones business, will
now be transferred to Nirma Ltd.
The board of directors
of the two companies, in separate meetings, has approved
the scheme of the arrangement, which will be submitted
to the Gujarat High Court for approval. The approvals
of shareholders and creditors will also be sought for
the scheme. Post-demerger, NIL will retain with it investments,
financial assets and other assets.
consideration of the merger, Nirma Ltd will issue 6-per
cent redeemable preference shares of a total value of
Rs 2.8 crore to the shareholders of NIL. Nirma Ltd will
also undertake to service the liabilities of the operating
division amounting to Rs 442 crore (as on 1 February 2003).
Haskins and Sells has, in its interim report, valued the
brands and trademarks in the range of Rs 1,400 crore to
Rs 1,600 crore, considering the capitalisation of royalty,
whereas the merger considers only the book value of the
assets being transferred, which totals up to Rs 445 crore.
It is, therefore, apparent that the terms of the merger
are value accretive to Nirma Ltd and its stakeholders.
Nirma, a saga of
enterprise, is a distinct example of successful Indian
entrepreneurship. The journey of Nirma, which began as
a one-man operation in 1969 with Dr Karsanbhai Patel,
to a company with a turnover of Rs 2,500 crore, has been
exceptional. Today, 33 years later, Nirma is a household
name across India.
As a vibrant and
proactive corporate citizen, the promoters of Nirma have
undertaken a host of activities in the educational and
social development areas and have also founded institutions
like Nirma University of Science and Technology, Nirma
Institute of Diploma Studies and Nirma Institute of Management.
The Nirma name, however, will continue to be used by these
institutions and promoters for their other public charitable
and non-profit-making activities.
company believes that it is well positioned to take advantage
of the anticipated economic upturn. At the same time,
it is reasonably insulated from the vagaries of the price
movements of the key input raw materials for detergents,
having completed the backward integration.