Jay Shree Tea and Industries Ltd (JSTIL), a B K Birla group company, has spawned an investment company through a major restructuring.

Mr R K Ganeriwala, President, CFO and Company Secretary of JSTIL told Business Line the new outfit — Parvati Investments Ltd (PIL) — would have investments, principally in group companies, worth Rs 47.86 crore and investment reserves of Rs 37.72 crore on its books. PIL would shortly apply for a license to RBI to operate as an NBFC.

In a multi-leg restructuring, PIL formally has been created out of Parvati Tea Co Pvt Ltd, an erstwhile subsidiary.

High court approval

The restructuring exercise was completed on August 10, after JSTIL obtained Calcutta High Court's approval on a scheme of amalgamation and arrangement between the company (JSTIL) and its two subsidiaries.

In one leg of the scheme, operating assets of Parvati Tea in Assam, primarily a tea-leaf processing factory, has been merged with JSTIL and the principal company transferred all its investments to Parvati Tea, which now will be rechristened as PIL.

Mr Ganeriwala explained that the transaction between Parvati Tea and JSTIL also involved part compensation to the latter in fresh shares (of the former) worth Rs 9.95 crore. But the transaction generated a loss on investments and interest of Rs 2 crore in JSTIL's books.

In another leg of the scheme, M P Chini Industries Ltd (MPCIL), a wholly subsidiary, was merged with JSTIL at a share swap ratio of three shares of JSTIL of Rs 5 each for one shares of MPCIL of Rs 10 each.

MPCIL, having a sugar crushing unit in Bihar, now stands merged with JSTIL with effect from October 1, 2010, and arrangement for Parvati took retrospective effect from April 1, 2010. JSTIL now will have three verticals – tea, fertilisers and sugar.

Consolidated results

Completion of the restructuring exercise allowed JSTIL to take on board 2010-11 consolidated annual results, which showed an additional net profit of around Rs 3 crore over the standalone figure of Rs 46.31 crore.

JSTIL said the consolidated accounts had been prepared after incorporating the results of its domestic subsidiaries — North Tukvar Tea Co Ltd, Parvati Tea — and an overseas subsidiary — Birla Holdings Ltd, as also the portion of profit from Tea Group Investment, a 50:50 foreign joint venture.

(This article was published on August 25, 2011)
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