Hindustan Tin Takes Over Conwell Cans

The company has acquired 8.5 lakh shares of Conwell Cans at a price of Rs 1.25 per share, including liabilities. The merger ratio has been fixed at 32:1 (32 shares of Conwell: 1 share of HTW).

The entire acquisition is being funded through internal accrual shares. Since HTW has taken over a sick unit, it has received a margin in paying the principal amount of Rs 4.24 crore to the banks and financial institutions. The principal amount will now be paid in installments up to the year 2000.

Moreover, HTW will pay Rs 1.1 crore as capital expenditure and Rs 1 crore as the margin money for working capital. Other benefits include one time deduction of Rs 1.89 crore (under Section 72 A of Income-tax Act ).

 

As against the 8 per cent sales tax by Himachal Pradesh government, HTW will be charged only 0.5 per cent for a period of three years. It will also get power at concessional rate to run the Jhar Mairi unit in Himachal Pradesh.

The new acquisition will enable HTW to produce open top sanitary (OTS) cans, with diameter less than 99 mm. It already has two units at Sahibabad, Uttar Pradesh with an installed capacity of 6,500 tonne and another at Sonepat in Haryana having 13,250 tonne capacity.

The new unit will raise HTW's canning capacity by 19 million can per annum.

The company has already started production of OTS cans at the Conwell unit for its client like Nestle. HTW now caters to 60 per cent of the canning requirement of Nestle India, 10 per cent of Heinz and 10 per cent of Asian Paints.

Besides catering to domestic demand, the company is stepping up its exports from Rs 2.5 crore in the year 1995-96 to Rs 7 crore in 1996-97.

With a market share of around 30 per cent in the OTS can market, HTW plans to spread its wings to capture the growing demand in the Southern states. It is also planning a highly sophisticated can manufacturing unit and printing line in Mysore.