Silverline Holdings will be paid for the sale of its stake by way of issue of up to 60 lakh additional equity shares of Silverline Industries on a preferential basis.

Both Silverline Technologies and Silverline Industries are at present subsidiaries of Silverline Holdings.

The equity stake of Silverline Holdings in Silverline Industries will go up to 56 per cent from the present level of 51.56 per cent following the allotment of fresh shares to the former.

Silverline Industries has taken over Silverline Technologies due to synergy in the business of the two companies. Both the companies are having complementing business relationship and carry out identical activities of software development.

Silverline Technologies market and contracts with the clients on its own and passes on the software development work to Silverline Industries which develops the computer software and exports it.

In its proposal to the Foreign Investment Promotion Board, Silverline Industries stated that there is duplication of resources and infrastructure amongst the subsidiary companies and it wanted to takeover Silverline Technologies for optimal utilisation.

The valuation of Silverline Industries' shares for the purpose of allotment to Silverline Holdings will be done according to the stipulations laid down by the Securities & Exchange Board of India guidelines.

Silverline Industries, which is trading on the stock markets at around Rs 490 per share, recorded a turnover of Rs 110.15 crore with an operating profit of Rs 54.06 crore and a net profit of Rs 41.15 crore during the year ended March, 1999. During the first quarter ended June 1999, turnover stood at Rs 40.73 crore with an operating profit of Rs 16.75 crore and a net profit of Rs 14.21 crore.

The company was granted permission in 1992 to set up two projects -- one at Chennai and the other at Mumbai -- for development of computer software under the export-oriented unit scheme. The company implemented the Chennai project only and the EOU project at Mumbai projected was abandoned. Instead, the company implemented another project at SEEPZ, Mumbai.