New Delhi, Delhi, India
Close on the heels of a successful IPO, Shivalik Global Limited (SGL), a leading textile fabric & apparel company, is acquiring Shyam Tex International Ltd. (STIL) for a consideration of Rs.25.69 crores. As per the scheme, of acquistion Shivalik Global Ltd will acquire in the 1st phase 60% of the equity capital of Shyam Tex International at its book value of Rs.16.06 per share which entails a cash outflow of Rs.15.42 Crores.
In the Second phase Shyam Tex International would be merged with Shivalik Global Ltd. Shivalik Global through a stock swap deal will offer 17.13 lakhs equity shares in the ratio of one equity share of Shivalik Global Ltd for every 3.73 shares of Shyam Tex International as a consideration for the balance 40% equity of Shyam Tex International. It would thus result in the increase of equity capital of Shivalik Global by Rs.1.71 crores from Rs.24.25 crores to Rs.25.96 crores. The merger will be effective from 01.04.2006
Shyam Tex International has achieved an approximate turnover of Rs.98 crores with an approximate net profit of Rs.4.35 crores for the year ending 2005-06. Some of the Company's European buyers include: Next French Connection, Debenhen, Mango, Burton etc. Shyam Tex International Ltd is situated at a prime location on main National Delhi - Agra highway.
Shivalik Global Ltd after this acquisition of Shyam Tex International would now have the benefits of higher capacities and better economies of scale which would be available to it immediately without any gestation period. Mores ever, the cost of expansion through this proposed acquisition of Shyam Tex International is significantly lower as compared to the original envisaged proposed expansion programme of Shivalik Global Ltd.
Earlier Shivalik Global, had finalized an expansion programme at its existing facilities and had proposed to set up a garment manufacturing unit near Faridabad but after this proposed acquisition of Shyam Tex International the expansion at existing facilities will not be taken up but instead the capacities that would now come under its fold through this proposed acquisition will be 145% higher in the case of knitted fabrics, 49% higher in case of dyeing and processing of knitted fabrics and 28% higher in case of dyeing, printing and processing of woven fabrics. The proposed 36% increase in the capacities of dyeing and processing of yarn as planned earlier, which anyway was a low-margin business segment, will not be taken up for now. The company however would shall be installing the de-bottlenecking equipments at its existing facilities amounting to Rs.6.00 crores.
The acquisition as explained earlier has been done at book value of Shyam Tex International which means no premium or goodwill has been paid for the running established business, possible revaluation of assets primarily land, and a well established clientele book. It will also remove any possible doubts regarding conflict of interest amongst prospective investors as Shyam Tex International was technically a group company.
The company is expected to close the year 2005-2006 with a turnover of around Rs.182 crores and PAT of close to Rs. 8 crores. At the same time Shyam Tex International Limited is expected to do a turnover of Rs.100 crores with a Net Profit of Rs, close to Rs. 4.35 crores for the year ending March 2006.
The company after completion of acquisition will achieve a consolidated turnover of Rs.300 Crores with a net profit of Rs.18 Crores on Equity of 26 Crores. The realization from the Real Estate Projects will start planning from the year 2008.
Siddhartha Upadhyay, Mutual PR, +91 9350852560 supadhyay@mutualpr.com
Source: Shivalik Global Limited (SGL) (Business Wire India)
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