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Thursday, Nov 18, 2004

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Indo Asian Fusegear to merge with subsidiary

Our Bureau

New Delhi , Nov. 17

ELECTRICAL switchgear equipment manufacturer Indo Asian Fusegear Ltd (IAFL) on Wednesday announced a reverse merger with its subsidiary Indo Kopp Ltd (IKL), as part of its strategy to increase the group's presence in Europe.

"The merger will help the company enhance its capital base, making it easier to raise funds from the markets. It will also strengthen our export initiatives in Europe," the Chairman and Managing Director of IAFL, Mr V.P. Mahendru, said here.

IAFL had posted a turnover of Rs 84 crore last fiscal, while IKL had a turnover of about Rs 33 crore.

Following the merger, the combined entity would target doubling the topline figures during the first year of operation to touch the Rs 250-crore mark in 2005-06, Mr Mahendru said.

He said the company had bagged an export order of Rs 50 crore from a UK client last month for supply of low-tension circuit protection equipment and compact fluorescent lamps. The merger would bring greater synergy and cost advantage, which would help get more orders from overseas customers, he added.

According to the merger plan, all equity shareholders of IAFL would be issued an equal number of equity shares, zero-coupon convertible warrants and preference shares in IKL on the same terms and conditions as existing in IAFL.

All the existing equity shares of IKL would be issued 17 preference shares of Rs 10 each for every 10 equity shares of Rs 10 each held in IKL. These preference shares would be converted into equity shares of IKL on April 1, 2006, as per SEBI pricing formula.

All the equity shares to be issued by IKL pursuant to the scheme would be listed on the stock exchange where IAFL is currently listed.

Mr Mahendru said the merger would help create a more efficient, cost-effective structure and make it easy for the company to raise loans.

He said since the cost of buying the Indo Kopp technology, along with its assets in factory land, building and machinery, on an ongoing basis would be extremely high, the board of directors felt it was prudent and economical to get these benefits for IAFL shareholders through merger.

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