Philips India set to be 100% arm via court route

Kolkata, Nov 25 | Updated: Nov 26 2005, 07:52am hrs
Philips Electronics India Ltd, the 75-year-old lighting and electronics major, is on its way to becoming a 100% subsidiary of Dutch parent Koninglijke Philips Electonics NV (KPENV) by following the court route towards extinguishing the last shares held by the public.

On Friday, shareholders of company, in which KPENV has a stake of 96.45%, voted at a meeting convened by the court to discuss a scheme of arrangement that was sent to them on October 7.

With the resolutions put to a poll, the results would be known by Sunday. The meeting was closed to the media.

According to Philips' legal head, Ashok Nambissan, the meetings went off well. "As per the directions of the Calcutta High Court, a poll was taken and the results will be announced latest by Sunday," he told FE.

According to the company's application and statement under sections 391(1) and 393 of the Companies Act, Philips will return the capital of members of 49,71,786 equity shares in full, thus ejecting the last members of the public.

Uniquely, nearly half this number (24,85,863) belongs to KPENV itself and 60 shares to Philips Radio BV. Philips' rationale for the scheme is that it would help shareholders unlock the value of their investments in the company. The company had appointed a valuer for the equity shares, but the report has not been disclosed.

Last year, Philips got its shares delisted from the bourses. However, despite a buyback that closed in February 2005, it was left with around 40,000 small shareholders spread over 500 cities and towns.

Meanwhile, having merged a clutch of subsidiaries with itself, the Indian unit issued a notice on August 9 this year for the annual general meeting (AGM), including a special resolution proposing the incorporation of an article regarding buyback of shares.

Barely 25 days after the September 13 AGM, Philips got a scheme of arrangement notified via the high court.

Now, with all subsidiaries merged with itself, and the Dutch parent set for a 100% stake, Philips Electronics has come a long way since it was set up in 1930 as a fully-owned subsidiary.

In the seventies, Philips and other multinationals had to limit the stake of their parents. At one time in the eighties, the Indian unit was stripped of the Philips tag and was called Peico Electronics.