Sterlite Inds Scraps Copper Divisions Demerger Scheme

Mumbai, September 16: | Updated: Sep 17 2003, 05:30am hrs
Sterlite Industries (India) Ltd (SIIL) has withdrawn the scheme of arrangement for demerger of the copper business into a separate company. The decision to withdraw the scheme of arrangement was taken by the SIIL board on Tuesday. The scheme of arrangement was opposed tooth and nail by the minority shareholders and was challenged in the high court.

SIIL, in a communique to The Stock Exchange, Mumbai (BSE), said, The companys plans to raise resources in the international markets are now well advanced and the market capitilisation of the company has increased and in the changed circumstances, the board decided not to proceed with the scheme.

SIIL stocks on Tuesday closed 6.76 per cent higher at Rs 534.85 on the BSE. The scrip opened at Rs 501 and reached an intra-day high of Rs 537.

Tarun Jain, director-finance, SIIL, when contacted, declined to offer any comments. The company has informed its boards decision to the stock exchanges. There is nothing more to be stated at the moment, Mr Jain said.

The scheme of arrangement of SIIL to restructure its copper, power transmission lines and aluminium conductor businesses, which was pending in the High Courts of Mumbai and Chennai, was challenged by the Securities and Exchange Board of India (SEBI), the Income Tax (IT) Department and a section of minority shareholders.

Meanwhile, the IT department opposed the scheme on the grounds that it may result in devaluation of shares of the company that the department has attached following a raid on its group companies in 1999.

As per the scheme, Sterlites copper business and investments was to be transferred to a separate company Sterlite Copper Pvt Ltd. Other features of the scheme included, issue and allotment of one equity share of Rs 5 each in the new company for every share held in Sterlite or a sum of Rs 175 for every share held in SIIL.

With the implementation of the scheme of arrangement, SIIL would have had only the aluminium conductor business which has a turnover of around Rs 200 crore, while the mainstay businesses of the company which include copper, aluminium and zinc production facilities will be transferred to the new company.

SIIL has controlling stakes in Balco and Hindustan Zinc. The investments in these companies have been parked in a special purpose vehicle Sterlite Opportunities and Ventures Ltd (SOVL). Sterlite also owns copper mines in Australia which will be transferred to the Sterlite Copper.

SIIL promoters had earlier stated their intention to delist from the Indian stock exchange and list the company at the london stock Exchange to get a better valuation for the business.

The first step towards the delisting was the scheme of arrangement to buyback shares, which was in practice a negative offer.

The promoters were able to hike their stake to 67 per cent as a result of the buyback. The company had then offered Rs 100 and bonds of Rs 10 for every share held in the company.

Sterlite has drawn up plans to increase the capacity of Balco from one lakh tonne to 3.34 lakh tonne, while the company has also drawn large scale capital intensive expansion plans for Hindustan Zinc.