Himatsingka To Hive-Off 100% Arm

The city-based Himatsingka Seide Ltd (HSL) has decided to dispose off its loss-making wholly-owned subsidiary Credit Himatsingka Ltd (CHL) as part of a move to focus on its core business.

The company is scouting for buyers who are interested in taking over the arm along with its properties and losses.

"We're on the look out for buyers. The process of `valuation' is on," a high official in the company said.

Himatsingka Seide is now in the process of liquidating its investments in shares and securities at CHL.

"In line with the our policy of concentrating on our core business of silk, we propose to dispose off the investments in the subsidiary company," HSL chairman G V K Rao said.

 

Credit Himatsingka Ltd will be valued by independent chartered accountants and its investments will be disposed off based on the valuation report. HSL plans to inform its shareholders' on this move after finalising the details.

CHL has invested part of its funds in a real estate project which is nearing completion. It has also bought properties outside Bangalore. According to company sources, profits from this project are expected to be realised during the current year and they will be sufficient to wipe out accumulated losses.

Credit Himatsingka Ltd had only received the certificate of registration as a non-banking financial company (NBFC) from the Reserve Bank of India.

On its losses, HSL blamed the continued sluggishness in the stock markets which has forced it to dispose off its investments. It has financed Rs 6.43 crore towards the real estate project.

The company expects to realise the sale proceeds during the second half of the current financial year.

Credit Himatsingka has posted an operating loss of Rs 45.8 lakh in the 1997-98 financial year against a loss of Rs 24.62 lakh during 1996-97.

According to the official, the parent has so far invested Rs 16 crore in CHL. However, hefty interest charges accruing out of these investments has affected the balance sheet of the HSL. Hence the disposal.

On its new project, Himatsingka Seide said its 100 per cent export-oriented unit for the manufacture of spun silk and blended yarn -- with technical know-how from Italy -- has commenced commercial production from April 1998.

The project cost stands at Rs 49.07 crore. The cost overrun of Rs 2.87 crore -- which was funded out of internal accruals -- was due to rupee devaluation and delay in commercial production, the company maintained.