The effective date of the scheme, subject to approval of the shareholders and other statutory approvals, including that of the Gujarat high court, will be July 1, 1998, which is the start of Birla VXL's current financial year.

VXL is currently engaged in the businesses of woollen textiles and heavy chemicals, which have 30 per cent and 18 per cent marketshares respectively in India.

On the advice of ICICI Securities, the merchant banking subsidiary of ICICI, the board of the company has found it "strategically advantageous to rearrange these two businesses into two independent corporate entities."

According to the vice-president (legal) of Birla VXL, UC Jain, the woollen textiles business of VXL will continue to be ownedand operated by it. That is, Birla VXL will, henceforth, be a purely woollen textiles company.

The scheme proposes that Saurashtra Chemicals Ltd shall, without any payment, allot to the shareholders of VXL, one fully paid equity share of Rs 10 of SCL at par for every two shares held in Birla VXL, on a record date to be fixed later.

SCL shall apply for listing of its shares on appropriate stock exchanges once the scheme is sanctioned. The board of the company believes that the scheme will enhance shareholder value and will not result in any dilution in the promoters' holdings.

The turnover of Birla VXL was Rs 679 crore for the 15-month period ended June 30, 1998, out of which Rs 383 crore was accounted for by business proposed to be retained and Rs 286 crore came from the heavy chemicals business, now proposed to be hived off into a new company.