Financial Daily from THE HINDU group of publications
Saturday, Jul 13, 2002
Mergers & Acquisitions
Escorts to get Rs 235 cr from divesting in 3 cos
NEW DELHI, July 12
ESCORTS Ltd has announced the divestment of its equity holding in Escorts JCB Ltd (EJCL) and Escorts Class Ltd (ECL) in favour of its joint venture partners - - J.C. Bamford (UK) and Class (Germany) respectively.
The company also said it was in the process of divesting its 50 per cent shareholding in Escorts Mahle Ltd to Goetze India Ltd (GIL), a joint venture of Escorts with Federal Mogul of the US.
The post-tax cash inflow to Escorts on account of sale of its equity holding in the three companies is expected to be in the region of Rs 235 crore, according to a statement issued by Escorts here today. The sale transactions will be booked during the current financial year.
The Escorts board approved these disinvestments, which are however subject to the requisite statutory approvals, at a meeting held today. The board, which also approved the company's results for the year ended March 31,2002, recommended a dividend of 10 per cent for the fiscal year 2001-02.
"The divestment is in keeping with our focus on the core businesses of agri-machinery, health care and telecom and our decision to exit the non-core businesses, where the value-addition by us as management in the context of international competition cannot result in sustainable growth," says the Chairman and Managing Director, Mr Rajan Nanda.
For the year ended March 31,2002, Escorts reported a net profit of Rs 8.13 crore on a net sales of Rs 1,107.93 crore. The company had reported a net profit of Rs 107.39 crore on a net sales of Rs 1,293.16 crore during the year ended March 31,2001.
The company's other income during fiscal 2001-02 stood at Rs 69.37 crore (Rs 115.67 crore).
For the quarter ended June 30,2002, the company has reported a net loss of Rs 29.65 crore on a net sales of Rs 167.33 crore. The company had reported a net profit of Rs 33.23 crore on a net sales of Rs 249.98 crore during the quarter ended June 30, 2001. Other income of the company for the quarter under review stood at Rs 1.50 crore (Rs 52.45 crore).
Even as Escorts had, during the quarter ended June 30, 2002, entered into an agreement to sell its entire 60 per cent equity holding in Escorts Class Ltd for a consideration of 13.2 million Euros (about Rs 63 crore at current exchange rates), the sale transaction has not been accounted in this quarter's results as it was yet to get the nod of the Foreign Investment Promotion Board.
For the quarter ended June 30,2002, the agri machinery products contributed revenues of Rs 99.36 crore; engineering products Rs 40.72 crore and traded products contributed revenues of Rs 23.50 crore.
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