Texmaco demerges heavy engineering and steel foundry business

Texmaco-LogoKolkata, Feb 23 : The K. K. Birla group company Texmaco has approved the scheme of demerger of its heavy engineering and steel foundry divisions and their transfer to the Texmaco Machines Limited (TML), a company release said Tuesday.

The demerger would enable the heavy engineering and steel foundry business and remaining real estate business of Texmaco to be pursued and carried on more conveniently and advantageously with greater focus and attention through two separate companies - Texmaco and TML - each having their own management team and administrative set up, it added.

"The two businesses of the company namely engineering and real estate, are in different stages of growth. The engineering business is well established and is poised to achieve greater heights with the development of railway infrastructure in the country," the release cited Texmaco chairman Saroj Poddar as saying.

"The real estate business, on the other hand, is at a fairly nascent stage. The valuations attributable to these businesses are driven by vastly different parameters. I believe that the separation of these businesses will unlock shareholder value by enabling greater management focus in each of the companies," he added.

"The fund requirement for both the engineering and the real estate businesses differ significantly in both timing and quantum and the nature of investors that would prefer to participate in each of these businesses are also different. The de-merger will enable investors to participate in the business of their choice. It would also enable the management to raise funds in an efficient manner," vice chairman Ramesh Maheshwari said, according to the release.

Texmaco is engaged in the business of designing and manufacturing wagons, components for coaches, locomotives, electrical multiple units, railway track materials, hydro-mechanical equipment, structurals, process engineering equipment, agro-machinery equipment. Other products include designing and manufacture of steel castings, ingots and other products in its steel foundry division.

The heavy engineering and steel foundry business of Texmaco, along with all assets and liabilities, would now be transferred to TML.

The current share capital of TML consists of 546,00,000 equity shares of Re. 1 each, fully paid up, entirely held by Texmaco, and in consideration for this transfer, all shareholders on the record date, would be issued shares in TML in the ratio 1:1.(IANS)

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