Duncan To Merge It Unit With Fertiliser Company

Duncan Infotech, at present a division of Duncans Industries Ltd (DIL), will be merged with the proposed Duncans Fertilisers Ltd (DFL).

G P Goenka, chairman, Duncan Goenka group, said the infotech division will come under the fold of the demerged fertiliser company.

Duncans have already applied to the Calcutta High Court for the proposed demerger of the tea division from its other businesses and merger of the infotech and fertiliser businesses. The company will seek the shareholders' approval in this regard at an extraordinary general meeting to be held on January 25.

On the rationale behind the demerger, Goenka said, "Over a period of time, we have realised that there are no synergies between tea and other divisions, and hence the decision to demerge the two."

Sources in the group said the Hyderabad-based infotech business is still under incubation. The fertiliser business contributes around Rs 850 crore to the Rs 1,100 crore turnover of the company.

However, due to the Central government's notification for downgrading revise retention prices for urea with retrospective effect from April 1, 2000, DIL is expected to return an estimated Rs 200 crore of fertiliser subsidy to the Centre.

The company has obtained a stay order on the notification from the high court. The demerged fertiliser company will be christened Duncans Fertiliser Ltd (DFL).

The tea business of DIL, along with the wholly owned subsidiary Santipara Tea Company, will be merged into group company Shubh Santi Services. Eventually, the merged entity will be renamed Duncans Industries.

The group is being advised by Lodha & Co on its business restructuring plan. Sources said, for every one share of the tea company, the shareholder will get four DFL shares.