Coimbatore, Dec. 7
KOVILPATTI Lakshmi Roller Flour Mills Ltd (KLRF), based in Tirunelveli district, has decided to acquire a controlling stake in Eltex Super Castings Ltd, a listed group company that has remained shut for the last three years.
KLRF, which has agreed to buy 64.50 per cent of the paid-up equity of Eltex at a price of Re 1 per share, has offered to acquire up to 20 per cent of the equity capital of Eltex through a public offer at a price of Re 1 per share (face value of share Rs 10).
In the public announcement to the equity shareholders of Eltex filed with SEBI, KLRF said that while 64.49 per cent of the equity of Eltex would be bought from Mr V. Jagannathan, the balance 0.01 per cent would come from Mr R. Srinivasan. Incidentally, Mr. Jagannathan is the promoter of both KLRF and Eltex. KLRF started off manufacturing wheat products and later forayed into textiles, engineering and power generation from windmills for captive consumption.
Eltex was a manufacturer of grey iron, SG iron and alloy iron castings. The company had two units near Coimbatore and a lockout was declared in August 2002 due to labour related problems. Its assets have been well-maintained and can be put into operation.
Eltex obtained a stay order from the Madras High Court in July 2005 against an order passed by the Board for Industrial and Financial Restructuring for change of management. The company's accumulated losses amounted to Rs 17.03 crore.
KLRF said during 2004-05, it registered a turnover of Rs 95.65 crore and of its three divisions, milling and spinning capacities were substantial. The capacity of the engineering division of KLRF was relatively smaller. To strengthen its engineering division and establish itself in the foundry segment,KLRF is acquiring a stake in Eltex that has a capacity to produce 9,000 tonnes per annum of grey iron, SG iron and alloy iron castings.
With this acquisition, the company is confident that its engineering division would emerge as a `separate profit centre.' A viability study on the available capacity, condition and adequacy of the infrastructure and the investment required for the equipment was done, based on which the acquisition decision was taken.
The public offer will be open from January 25 to February 13, 2006.