Gammon India seeks nod from shareholders to sell stakes in foreign arms

Written by fe Bureau | Mumbai | Updated: Sep 2 2014, 06:09am hrs
Moving ahead on its corporate debt restructuring obligations, Gammon India has sought shareholders' approval to either monetise, divest or sell stake in its foreign subsidiaries/associates. The company is also seeking shareholders' nod for selling majority stake in its infrastructure arm, Gammon Infrastructure Projects, to another subsidiary Gammon Power.

These two proposals, among others, will be voted on by the shareholders at an extraordinary general meeting (EGM) convened by the company on September 20.

In 2008, Gammon India made three acquisitions in the Italian market, investing close to euro 100 million in buying Franco Tosi Meccanica, Sofinter and SAE Powerlines.

However, the businesses did not function as per expectations. According to the latest information available on BSE, Sofinter Group posted a net profit of euro 2,369,646 on consolidated revenues of euro 263 million as on December 31, 2012.

Franco Tosi Meccanica, on the other hand, has been going through a rough patch. During 2012, the business plan of the company suffered due to the political and financial crisis in Italy and poor market conditions in general for power equipment manufacturers.

Analysts believe that as there have been no change in the operations of these subsidiaries, the company may recover only half of its investments made. An analyst tracking the company in a domestic brokerage told FE, "With no change in operations, it hopes to recover at best half or around Euro 50 million through sale of stake in these subsidiaries".