Birlas Sell Entire Holdings In Birla Kent To Abb
The GP Birla-CK Birla group has offloaded its entire holding in Birla Kent Taylor, a joint venture between the Birlas and the Swiss multinational Asea Brown Boveri, which the group held through Orient Paper & Industries subsidiary Air Conditioning Corporation. The stake is being sold to the overseas partner ABB.
According to sources, the group entered into a memorandum of understanding with the Swiss multinational early this year. The MoU was for sale of about 13,35,722 equity shares held by Air Conditioning Corporation Ltd, the wholly-owned subsidiary of the Orient Paper & Industries Ltd, for Rs 5.92 crore against the companys book value of Rs 2.16 crore.
According to sources, a decision to sell off its entire holding has been taken to tide over the financial crunch being faced by the ailing subsidiary, the Air Conditioning Corporation Ltd.
Once the necessary approvals from the government are obtained, the shares will be transferred to ABB, resulting in a profit of approximately Rs 3.75 crore for Air Conditioning Corporation which will be accounted for in the current year.
The GP Birla-CK Birla group had already handed over management control to the Swiss firm about a year back and subsequently decided to divest its holding during the 1996-97 financial year, the source added.
Birla Kent Taylor, a 50:50 joint venture between Air Conditioning Corporation and ABB, is engaged in the manufacture of electrical instruments, panels and switches. While handing over management control a year back, Birla Kent Taylor had made a rights issue to increase the ABB stake in the joint venture company.
Meanwhile, Air Conditioning Corporation has posted a net loss of Rs 1.97 crore in the financial year ended March 31, 1997 as against a loss of Rs 1.59 crore in the previous year on an enhanced share capital of Rs 2.4 crore.
After providing Rs 81,033 for income tax for the previous year 1995-96, the company carried forward a loss of Rs 3.53 crore, which includes a sum of Rs 1.55 crore as brought forward from the previous year.
Since the companys performance has been under the weather for sometime, the management has been toying with the option of merging the company with the holding company, Orient Paper & Industries.
A similar step was taken during fiscal 1994-95, when Orient General Industries Ltd, yet another wholly-owned subsidiary of the company, was merged with Orient Paper & Industries with effect from March 1, 1995.
However, no decision has been taken as yet to merge the subsidiary with the paper manufacturing flagship company of the GP Birla-CK Birla group.