The valuation exercise done by Lodha Capital Markets of Calcutta took into account the book values of the two companies, their price/earning capacity value and the average market price for the last six months and arrived at the final values by assigning weightages to different methods of valuation, company sources said.

As on April 1, 1999, the book value per share of BCML and TSCL stood at Rs 102 and Rs 28 respectively, they said. Interestingly, 71 per cent of Tulsipur's Rs 5 crore equity capital held by BCML will be extinguished on merger.

BCML's acquisition cost of Rs 18 crore will be adjusted against share capital and reserves in the next year's accounts with the premium paid on Tulsipur shares leading to a proportionate reductionin the company's reserves.

Significantly, BCML's equity of Rs 18.76 crore will increase by only Rs 21.15 lakh to Rs 18.97 crore, whereas its crushing capacity will increase from 16,000 tonnes crushed per day (tcd) to 21,000 tcd.

The crushing capacity of TSCL is currently being expanded from 2,500 tcd to 5,000 tcd at a cost of Rs 60 crore. The expansion project is being funded through long-term debts, soft loans from the Sugar Development Fund and promoters' contribution.