The Hindu : Business : Henkel SPIC-Henkel India merger swap at 1:1

Online edition of India's National Newspaper
Wednesday, Nov 10, 2004

Business

Business

Henkel SPIC-Henkel India merger swap at 1:1

By Our Staff Correspondent

The Chairman of Henkel SPIC, A. C. Muthiah, addressing a press conference in Chennai on Tuesday. Looking on are: the Managing Director, Satish Kumar, and the Director, Peter K. Scherer. — Photo: Shaju John

CHENNAI, NOV. 9. Henkel SPIC India Limited (HSIL) will be merged with Henkel India Limited (formerly Calcutta Chemical Company Ltd.) at a stock swap ratio of 1:1. The merger is proposed to be effective from July 1, 2004. HSIL holds 92 per cent stake in Henkel India Limited (HIL).

The board of Henkel SPIC, which met here today, approved the merger move.

Synergy

Addressing a press conference here, A. C. Muthiah, Chairman of Henkel SPIC, claimed that the merger was unique and done to synergise the best practices of both companies. With this merger, there would be optimisation of infrastructure cost, he added. There would also be a reduction in overhead cost consequent to the elimination of co-ordination points. All these would drive HSIL on the road towards dividend declaration, he said.

Post-merger, there will be no change in the shareholding pattern of Henkel India. German parent Henkel KgaA will continue to hold 51 per cent stake in the merged entity. Indian partner Tamil Nadu PetroProducts Ltd. (TPL) will have 16.9 per cent. IFC will hold 7 per cent. The balance will remain with the public.

The company hopes to complete the entire merger process in six months. Simultaneously with the merger initiative, efforts are also on to clean up the balance sheet, so as to be in line with the latest accounting standards. Henkel SPIC will dip into reserves to write off the deferred revenue expenditure of Rs. 249 crores and the accumulated loss of Rs. 55 crores.

New structure

Under the new structure, all manufacturing units will be consolidated under Henkel India. Henkel Marketing India Ltd. will undertake marketing activities after renaming Detergents India Ltd. At present, HSIL, HIL and Detergents India have their own manufacturing facilities.

Further, the restructuring exercise will also see all brands (Henko Range, Mr White, Margo, Neem Toothpaste, FA range, Chek and Brisk range) produced by these different companies consolidated under Henkel India.

Marketing

Post-merger, Henkel India will supply these products to Henkel Marketing India at an agreed price. The new marketing company will be responsible for selling, distribution and marketing of Henkel India products, according to the Managing Director of Henkel SPIC India, A. Satishkumar.

Henkel India will be convening a board meeting shortly at Kolkata to approve the merger proposal. Ernst & Young carried out the valuation of the shares for determining the share exchange ratio. HIL and HSIL will subsequently be filing their applications with the Madras High Court for getting the required statutory approvals.

The merger could have twin fallouts. For one, the tie-up with Henkel Marketing India will ensure income stream for merged Henkel India, which will go a long way in furthering the cause of the shareholders.

For another, the consolidation of all marketing-related activities under Henkel Marketing will give the German parents a lot more leeway to introduce more German brands into India.

Printer friendly page
Send this article to Friends by E-Mail

Business