Gujarat Ambuja, ACRL Swap Ratio At 1:50

Mumbai, July 15: | Updated: Jul 16 2002, 05:30am hrs
Gujarat Ambuja Cements Ltd (GACL) is merging its ailing arm Ambuja Cement Rajasthan Ltd (ACRL) with itself. The exchange ratio, based on the valuation report of NM Raiji & Co, has been recommended at 1:50, i.e., one new share of GACL to be issued for every 50 shares of ACRL.

The management of ACRL (formerly DLF Cement) was acquired by GACL in March 2000. The current share capital of ACRL is about Rs 261 crore, out of which Rs 128 crore (49 per cent) is owned by GACL. Based on the valuation ratio, GACL will issue 26,62,424 shares to the shareholders of ACRL.

This would increase the share capital of GACL from Rs 155.19 crore to Rs 157.85 crore, an increase of 1.7 per cent.

Commenting on the proposed merger, GACL whole-time director Anil Singhvi said, "In view of the strategic location of ACRL’s cement plant which fits well into GACL’s market strategy of having leadership in the cement markets of north and west, the proposed merger will not only benefit in terms of this marketing strategy but will also reduce lots of cost on selling and administrative overheads of both the companies."

The board of directors of GACL and ACRL, who met on Monday, have approved the merger, subject to necessary approvals.

ACRL has a 1.5 million tonne cement plant along with a 21 MW captive power plant located at Rajasthan. The company markets its cement under the "Ambuja Cement" brand name and enjoys a leadership position in the markets of Rajasthan, Haryana and Delhi.

The merger will result in the cement capacity of GACL going up to 10.5 million tonne, and along with its subsidiary Ambuja Cement Eastern, to 12.5 million tonne.

GACL has been trying for sometime to restructure the operations of ACRL which had incurred a loss of Rs 55.09 crore for the year ended June 2001.

The share price of GACL which had opened at Rs 198.95 at the Stock Exchange, Mumbai on Monday closed at Rs 197.45, a fall of 0.75 per cent. However, the stockprice of ACRL rose by 1.57 per cent from its opening of Rs 6.35 to close at Rs 6.45.