Srf To Demerge Into Two Companies

The Arun Bharat Ram-controlled SRF Ltd has drawn up plans to demerge its operations into two companies.

While the core business of tyre-cord fabrics and refrigerant gases will remain with SRF, smaller businesses comprising polyester films, fishnet twine/yarns and engineering plastics are being spun off into a separate company.

At present, the smaller businesses account for about 15 per cent of SRF's turnover. According to a company release, the revamp is aimed at providing the focus that the businesses need in order to grow to their potential.

All existing SRF shareholders will be given shares in the new company in proportion to their stake in SRF. Thus, the new company will have the same shareholding pattern as that of SRF.

 

The board has approved the proposal at its meeting held here yesterday. However, the ratio in which the shares will be allotted is yet to be worked out.

In another initiative, SRF is planning to merge Tyrecord Fabrics Ltd, the nylon 6,6 unit it acquired from DuPont some time back, into itself.

According to sources, TFL will then become a division of SRF and its shares will be extinguished.

TFL, at the moment, is a 100 per cent subsidiary of SRF. The board gave its approval to this proposal as well.

The merger will raise the tyre-cord fabric capacity of SRF from a little over 21,000 tonne per annum to 33,500 tpa.

The capacity of TFL, when it was taken over by SRF was 6,250 tonne per annum, has now been raised to 12,500 tonne.

The planned restructuring, the release said, would lead to an enhancement in shareholder value by creating focused entities, consolidating similar businesses, reducing tax liability and improving investor perception and re-rating.

In the last five years, SRF has made several strategic moves to strengthen itself in light of the changing business environment.

It consolidated its major businesses of tyre-cord fabrics and refrigerant gases, while divesting several smaller businesses.

SRF is the leading producer of tyre-cord fabric and refrigerant gases in the country. The seventh-largest producer of tyre-cord fabric in the world plans to strengthen its position further in the domestic and global markets.