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Sujana Metal shines on revamp, plans merger of unlisted entity

Jayanta Mallick

De-merger to reflect 1:1 capital division with Sujana Towers

Kolkata , Oct. 12

Sujana Metal Products is remaining in Dalal Street's active zone on its restructuring proposals. The stock finished 1.62 per cent higher at Rs 69.05 with a trading quantity of 2.18 lakh shares on the BSE.

Mr S. Hunumantha Rao, Director of the company, giving an update on the twin proposal of de-merger of structural tower business and merger of a unlisted group entity told Business Line on Thursday that an application with regard to obtaining a no-objection certificate from the BSE has been filed and after the exchange's nod, a combined scheme of arrangement would be placed before the Andhra and Tamil Nadu high courts.

Stock split

Mr Rao informed that the Rs 10 face value Sujana Metal stock, according to the combined proposal, would be split into Rs 5 each to accommodate the de-merger plan to reflect the 1:1 ratio of capital division between Sujana Metal and the new entity (which will also be listed on the BSE) Sujana Towers Ltd.

The company is also transferring the 70,000 tpa structural mill to the new entity. The new entity will also inherit the 76,125 tpa tower making capacity.

Under an on-going expansion plan, this was to be increased to 1.28 lakh tpa by the end of December 2006. "As the demerger process would take about three months for completion, the proposed Sujana Towers will commence with a base tower making capacity of 1.28 tpa."

Merger ratio

As the second leg of the scheme, the Chennai-registered Sujana Steel is proposed to be merged with Sujana Metal. The swap ratio for this has been suggested at 2.25 shares of Sujana Steel for one Rs 5 share of Sujana Metal.

Sujana Steel (formerly known as Padmini Corporation) has a rolling mill of 1.40 lakh tpa capacity. Sujana Metal itself produces TMT bars (capacity 1.50 lakh tpa).

Shareholding pattern

The current shareholding of Sujana Metal shows that following recent conversion of warrants, the promoters' stake has gone up to 33.84 per cent from 29.48 per cent as on March 31. "There are no outstanding warrants of the company", he added.

Blackstone and Aeneas Capital Management have recently picked up shares of the company through placement. Currently, Blackstone holds around 5.41 per cent, while Aeneas Capital Management holds 5.64 per cent.

During the March-June (2006) quarter, another overseas fund - HSBC Financial Services Middle East has accumulated 3.62 per cent stake in Sujana Metal Products through market purchases.

Mr Rao said the current holding of stressed assets stabilisation fund (SASF), a wing of IDBI, Chennai, will eventually go to IDBI.

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