Financial Daily from THE HINDU group of publications
Thursday, Jun 06, 2002
Mergers & Acquisitions
Phillips Carbon to merge Trans Holdings with itself -- Decision on loss-making units soon
KOLKATA, June 5
PHILLIPS Carbon Black Ltd, an RPG-group company, is merging its subsidiary Transmission Holdings Ltd with itself. This is the only profit-making subsidiary of the company.
The merger is a part of an overall corporate strategy currently being worked out by the management to increase its profitability, enhance shareholders' value and, in the process, clean up the balance sheet.
The three subsidiaries of Phillips Carbon Black are namely, Transmission Holdings Ltd, South Asia Electricity Holdings Ltd and PCBL Industrial Finance Ltd. The last two are loss-making outfits.
For the year ended April 30, 2001, Transmission Holdings recorded a profit of Rs 3.79 lakh but its total losses were at Rs 39.07 lakh. South Asia Electricity and its accumulated losses were Rs 22.15 crore. During the corresponding period PCBL Industrial Finance's loss was Rs 75.10 lakh and its accumulated loss was Rs 54.49 crore.
Previously, the company was considering the merger of all the three subsidiaries with itself. However, it had decided against it. Talking to Business Line, Mr Paras K. Chowdhary, Director, said a decision on the two other companies will be taken soon.
"For the time being we have decided on Transmission Holdings only. The decision on the other two companies will be taken along with the total financial restructuring programme of the company within the next two months," Mr Chowdhary said. He said that all options were being looked into and, if necessary, these subsidiaries might not be merged at all. The financial restructuring programme was being prepared in-house by Phillips Carbon Black. "The fate of these subsidiaries will be decided in context with the whole company," he added.
Phillips Carbon Black on its own did fairly well. For the year ended September 30, 2001, the company registered a 20.44 per cent growth in sales to Rs 489.83 crore from Rs 406.03 crore of the previous year. However, profit after tax dropped by 35.52 per cent to Rs 4.32 crore from Rs 6.70 crore.
For the current financial year the company is expecting to touch the Rs 500-crore turnover mark. In the first half it did well, but Mr Chowdhary did not expect anything better during the last three to four months. "I do not think that there will any significant change in the business scenario," he said.
When asked whether the company will continue with the October-September accounting period, he said that this arrangement will continue for "sometime".
Phillips Carbon Black planned to set up units in China and Sri Lanka. However, till date nothing has materialised. Company sources said that studies are being conducted on this matter.
In July last year, the Kochi unit of Phillips Carbon Black was closed due to pollution problem. The plant has been re-opened but is operating only at 40 per cent capacity. Sources said capacity utilisation would be increased slowly.
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