The Indian Aluminium Company (Indal) has decided to merge Annapurna Foils Ltd (AFL) with itself. As Indal has scaled up its holdings in the ailing AFL to 90.5 per cent stake, the move makes the process of merger easier.
The Aditya Birla group aluminium company recently increased its stake in AFL through acquisition of shares from the company's erstwhile promoters. It subsequently converted into equity the funds it had pumped into AFL to clear off the firm's loans to banks and financial institutions.
Sources said Indal would put forward the merger application to the Appellate Authority for Industrial and Financial Reconstruction (AAIFR), the agency looking after the implementation of the revival scheme of AFL, shortly. They added that brands of AFL would not be extinguished after the merger.
Indal would also ask AAIFR to fix the modalities of the exit option to be offered to small shareholders of AFL before the proposed delisting of the company from the bourses.
AFL cannot continue to be listed on bourses as under Sebi's listing norms, companies with floating stock of less than 10 per cent of paid-up equity cannot be listed. Such companies have to be delisted unless the promoters come out with a scheme to increase public holding above the required 10 per cent level within six months.
Annapurna Foils has already written to stock exchanges where it was listed to let it know about the procedure involved in getting delisted.
The rehabilitation scheme sanctioned by AAIFR stipulated that Indal would have to clear off the outstanding dues of Annapurna Foils to banks and financial institutions in two tranches.
Accordingly, Indal brought in the first instalment immediately after the AAIFR order and the second, in the beginning of January.
Prior to that, Indal acquired the company by buying out the erstwhile promoters' stake. AAIFR sanctioned a three-pronged rehabilitation scheme.
The appellate authority stipulated that Indal would acquire stake from the promoters. After that, Indal could repay the loans to banks and convert the amount into equity and could also write down in the share capital of the company.
