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Asahi India Glass Mulls Merger With Acquired Subsidiary
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Asahi India Glass (AIG) is considering a merger with its 80 per cent subsidiary Float Glass India (FGI), which it had taken over in 2001.
Asahi, part of the $10.3-billion Asahi Glass Company of Japan, set up FGI as a joint venture with Tatas to manufacture float glass of automotive grade as well as architectural quality with an installed capacity of 500 mt per day in 1991. Though the company made losses in its initial years, AGC regularly infused preference share capital to shore ip the networth of the company. In 2001, it acquired the state of the Tatas to take its holding up to 74 per cent.
Asahi is the market leader in its segment, was set up as a joint venture with the Labroo family and Maruti Udyog to manufacture automotive glass in 1984, and currently has a capacity of 1.2 million car sets per day. The company caters to all auto majors that include Maruti-Suzuki, Hyundai, Telco, Toyota, Mahindra & Mahindra, Ford, Honda, General Motors (GM) and also supplies toughened glass to white goodsÂ’ manufacturers.
Following a decision by the Japanese parent company to restructure its India operations, AGC transferred its entire holding in FGI to Asahi. It also undertook financial restructuring of FGI to help turn the company around by assuming a substantial reduction in value of its preference shares as well as rescheduling the tenure and terms of the existing foreign exchange borrowing of $48 million.
The boards of Asahi and FGI are slated to meet at the end of January to consider a merger.
According to a release, the merger will help the companies to further benefit from the synergies in their operations.
Besides this, FGI has substantial unabsorbed losses, which could help the merged company to save on account of income tax liability on it profits.
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January 24th, 2003
Source: Financialexpress.com |
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