The Board of Directors of Jay Shree Tea & Industries Ltd and Majhaulia Sugar Industries Private Ltd have considered and approved the scheme of amalgamation of both the companies.

Majhaulia Sugar is the wholly owned subsidiary of Jay Shree Tea & Industries and both the companies are engaged in the same sector of business, i.e. agriculture and both have common economic objective and strategic goals, the company said giving the rationale behind the amalgamation.

“While the transferee company (Jay Shree Tea) is engaged in the business of cultivation, manufacture and sale of tea, the transferor company (Majhaulia) is engaged in the business of production, manufacture and sale of sugar and its by-products molasses, ethanol and bagasse. It would be advantageous to combine the activities and operations in a single company leading to strong capability in effectively meeting future challenges of competitive business environment,” the company said in a notification to stock exchanges on Thursday.

common expenditure

The amalgamation would enable the companies to streamline their business activities into a single combined entity, thereby resulting in economies of scale and avoidance of undue duplication in work, reduction in common expenditure otherwise incurred by the two entities within common group, better and more productive utilisation of financial, human and other resource and enhancement of overall business efficiency.

This apart, it would also result in significant reduction in multiplicity of legal and regulatory compliances which at present is required to be made separately by the companies.

“The amalgamation will result in diversification of business of the transferee company. The business of the transferor company can be advantageously combined with the business of the transferee company resulting in optimum growth and profitability of the merged entity and enable the merged entity to withstand any cyclical recession. The merged entity will be able to leverage their consolidated business by pooling the resources, business processes and assets for common purpose,” it said.