All steel manufacturing operations of Jindal Strips have been brought under Jindal Stainless.
Arvind Parakh, director finance, Jindal Stainless told FE that the Restructuring has been done to unlock the true value of the enterprise. The true value of Jindal Strips was not reflected in the previous company and the restructuring exercise will help just do that, he added.
We hope that stocks of both the companies will be available for trading from either Monday or Tuesday, as all the formalities have been completed. Shareholders, whose names appear in the companys share register on September 16 were entitled for shares of the new company, he added.
Jindal Strips, a purely investment company now, has investments of Rs 250 crore (at book value on March 31, 2003) in the group companies including SAW Pipes, Jindal Iron and Steel Company and Jindal Vijay Nagar Steel. Jindal Strips hold around 6-10 per cent of each of these companies equity.
Since the market value of all these stocks, which Jindal Strips holds, has risen many-fold (as high as 400 per cent) over the past six-seven months, the intrinsic value of Jindal Strips has also gone up subsatntially. Although Mr Parakh declined to put a figure to that, he agreed that it will definitely be reflected in the valuation of Jindal Strips.
Jindal Strips was last traded at Rs 360 on September 9, 2003, before the restructuring in its original form. All the manufacturing business as well as assets and liabilities have been transferred to Jindal Stainless.
The restructuring will be effective from 1st April 2002 and will not result in any equity expansion and its equity will remain at Rs 18.9 crore.
As part of the restructuring, Jindal Strips original equity of Rs 18.9 crore has been split in the ratio of 73:23 (Jindal Stainless and Jindal Strips respectively). Further a bonus in the ratio of 1:1 issued by Jindal Strips will enhance the equity of Jindal Stainless to Rs 18.9 crore.