Cimmco Birla, the S K Birla group company, is considering a business portfolio rejig aimed at strengthening its diverse businesses. The proposal will be discussed at the company's forthcoming board meeting.
Such a move was necessitated due to the Cimmco Birla's diverse combination of businesses which hindered its plan to achieve a competitive edge and work on self-reliant growth strategies.
In a bid to provide adequate scope for development of all its businesses, internal reorganisation had been effected by the company over the past few years.
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Cimmco Birla plans to re-arrange its businesses into two separate corporate entities with their own defined core businesses. It will segregate operations into engineering and non-engineering businesses by spinning off the non-engineering businesses, along with their assets and liabilities, into an independent new company.
With this, the new unit will be able to focus on non-engineering businesses, while Cimmco Birla will lay emphasis on engineering.
Shareholders of Cimmco Birla would, by operation of the scheme, receive equity shares of the new company _ to be issued at-par without payment _ in proportion to their existing holding in Cimmco Birla as per the ratio prescribed in the scheme.
The new company will apply for listing of its shares with appropriate stock exchanges.
According to an official communique, the scheme will be subject to approvals from shareholders and the high court, once it has been cleared by the company's board of directors.
During the financial year ended March 31, 1998, Cimmco Birla posted a turnover of Rs 429 crore. Of this, about Rs 275 crore had come from the businesses the company is planning to retain.
The promoters' holding will remain unchanged despite the implementation of the proposed restructuring scheme.
The company's capital structure too will stay unaffected as will the financial position of the various businesses, an official company release said.
Cimmco Birla is engaged in the field of engineering (particularly capital goods and domestic and international projects supply) and polymers processing as well as 100 per cent export oriented unit for cotton yarn.