The Hindu Business Line : Revamp fuels rally in Rane Madras

THE stock price of auto-component company Rane Madras gained sharply on Thursday after the company's investments were de-merged from the manufacturing activity.

Last year, Rane Group had announced restructuring with the objective of separating the investment in various companies from the core business of automotive components.

In today's trading, the stock was locked in the 20 per cent upper circuit filter both on the BSE and the NSE. It closed at Rs 207.10 on the BSE with volumes of 65,593 shares and on the NSE, at Rs 207.20 with volumes of 2.43 lakh shares

Brokers said since the restructuring is complete, the value of the company's investments and business will now be unlocked.

As per the restructuring, the various investments of Rane Madras will be shifted to separate company Rane Holdings that will be a listed company. Shareholders will get one share of Rane Holdings for every one share of Rane Madras.

According to a company's notice to stock exchanges, the name of the company would be changed to Rane Holdings Ltd (RHL) and the entire manufacturing undertaking of the company would be transferred to the resulting company to be renamed as Rane (Madras) Ltd.

Till now, Rane Madras had holdings in groups listed companies Rane Brake Linings (14.04 per cent stake) and Rane Engine Valves (23.24 per cent).

At the time of announcement of the restructuring, the group had said Rane Holdings would effectively offer the investors a mix of the entire group's manufacturing portfolio. It said given the size and diversified auto component portfolio in the group, this should be of considerable value to the investor. This would additionally provide a strong vehicle for raising resources in the long run at lower cost of capital for new business opportunities.

According to analysts, the value of Rane Madras and other groups companies was not unlocked due to the cross holdings.

"With investments being separated from core business, investors can now value the main business while they can participate in the other group companies ventures by investing in Rane Holdings," said a dealer with a domestic broking firm.

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