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Tuesday, Oct 26, 2004

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Indian Seamless to merge 2 group cos

Our Bureau

Pune , Oct. 25

THE Pune-based Indian Seamless group has decided to merge Indian Seamless Metal Tubes Ltd (ISMT) with Indian Seamless Steels and Alloys Ltd (ISSAL). It has been decided to name the new company as ISMT Ltd.

According to an official communication, the merger is expected to result in a saving of about Rs 5-8 crore from reduction in fixed costs of common functions, in banking transaction costs and in operating costs in respect of procurement, inventories, etc. In addition, it would provide a hedge for ISSAL foreign currency loans and would result in generating a bigger and robust balance sheet.

It noted that the merged entity would be able to position itself as a strong steel-tube manufacturer and this would help in improving its global image and competitiveness. In addition, the combined business operations would insulate the steel business from the cyclical impact.

According to the release, the combined gross sales touched Rs 647.83 crore and cash profit of Rs 33.81 crore. The profit before tax stood at Rs 16.91 crore and operating profit at Rs 80.35 crore.

The combined entity will have a tax shield of over Rs 700 crore and hence will not be required to pay any tax beyond the minimum tax for the next few years.

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