Rpg Group Nod For Cable Firms Merger
The RPG group has approved a three-way merger of its two cable companies, Asian Cables and Upcom Cables, with RPG Telecom. This was approved at a board meeting of all the three companies here yesterday. The board also recommended a swap ratio of 1:2:5.
Each Asian Cables shareholder will get one RPG Telecom share for every five shares of the former. Each Upcom Cables shareholder will get one RPG Telecom share for every two shares of Upcom.
Scrips of all the three firms were quoting less than Rs 20 per share. RPG Telecom closed at Rs 17.5, Asian Cables at Rs 11.25 and Upcom Cables at Rs 15.75.
The merger will be effective from April 1,1996. The accounting year of all the three companies is being extended to September 30 this year to show consolidated accounts. RPG Telecom will have to pay stamp duty either on the immovable assets of Asian Cables or on the value of the new shares issued by it to the latter's shareholders.
Post-merger, the new company will have an equity of Rs 23.74 crore, net sales of Rs 360.60 crore, reserves of Rs 188.87 crore and a gross block of Rs 225.53 crore.
In 1996-97 the combined turnover of all three companies will jump to Rs 500 crore, an RPG source said.
The companies performed badly during the first half of the year. Upcom Cables posted a lower net profit of Rs 0.27 crore in September 1996 against Rs 3.81 crore in the corresponding period of the previous year. Sales too dipped to Rs 30.75 crore from Rs 44.5 crore.
Asian Cables incurred a loss of Rs 1.58 crore against a profit of Rs 1.45 crore. Sales stood at Rs 63.37 crore. The poor performance was mainly due to a dearth of orders for telecom cables from the telecom department (DoT). Due to a cash crunch, the department considerably reduced its orders. As a result telecom cable firms were affected.
The companies will soon be calling an extraordinary general meeting (EGM), to approve the merger. Petitions in the high courts of Mysore (RPG Telecom), Lucknow (Upcom Cables) and Mumbai (Asian Cables) will also be filed soon.