Stronger Samtel In The Offing

Major gainers in the scheme are the promoters whose holding in SEDL stands higher at 64.56 per cent against 4.22 per cent in the equity of SCL. Post-merger, the promoters' stake will rise to 30 per cent in SCL. The merger of SEDL with SCL is probably the first step towards the consolidation of the four group companies. Samtel India (SIL) and Samcor Glass (SGL) are the other group companies.

The operations and fortunes of these companies are interlinked and it makes business sense to have them under one roof. The consolidation will enable the Samtel group to tackle rough weather and intensified competition in the consumer electronics market. The merger will also eliminate existing inter-company transactions improving investor confidence.

 

SIL, the holding company, makes black and white (B&W) picture tubes. Sluggish demand for B&W televisions resulted in lower demand for its tubes. SIL ended 1996-97 with a net loss of Rs 6.81 crore on a turnover of Rs 161.67 crore. SIL, in turn, is a major customer for SGL which makes glass shells used to make picture tubes. SIL's poor performance affected SGL and its turnover declined by 27 per cent to Rs 103.91 crore in 1996-97.

The third company, SCL makes colour picture tubes (CPT). This company too has been hit by the tight liquidity situation and poor offtake of colour televisions. Its net profit declined by 52.8 per cent to Rs 8.91 crore in 1996-97. This, in turn, affected the performance of SEDL, which supplies electron guns for CPT's of SCL and for B&W picture tubes of SIL. SEDL's turnover declined by 14.9 per cent to Rs 62.76 crore while its net profit plunged by 38.6 per cent to Rs 6.38 crore.