ANG Auto to merge its subsidiary ANG AUTO TECH PVT LTD

ANG Auto Ltd has announced that the Board of Directors of the Company at its meeting held on March 31, 2007, has approved the Scheme of Amalgamation of it's 75% subsidiary ANG AUTO TECH PVT LTD with the Company, under the provision of Section 391 to 394 of the Companies Act, 1956.

The Scheme shall be subject to necessary approvals and sanctions of the Hon'ble High Court of Delhi and other Authorities.

The Company is a manufacturer of auto parts for the HCV Segment, primarily in the Trailer Axles, Air Brake Component & Transmission Component side. It exports most of its products to America & Europe to various OEM's customers.

ANG Auto Tech Pvt Ltd (AATPL), a 75% subsidiary of the Company, is incurring a capex of Rs 610 m (Rs 250 m in 1st Phase initially and Rs 360m in the 2 Phase) for a facility manufacturing 6000 tractor trailers p.a. at Sitarganj, Uttaranchal. The unit is e1igible for a tax holiday u/s 80IC of the Income Tax Act, 1961 and also eligible for Excise duty exemptions and concessional rates of Central sales Tax.

The merger provides shareholders of the Company an opportunity to de-risk their investment by participating in the growth opportunities of ANG Auto Tech Pvt Ltd to the tune of 100% as against 75% earlier.

The merger should be earnings aceretive for the Company's shareholders at the proposed merger ratio. This merger will also facilitate the integration of management resources with economic interest while providing for free flow of products and intellectual capital between the two Companies.

The Merger will result in strong financial structure, will facilitate resource mobilization and financial consolidation. The Merger will result in lowering of overheads. The synergies of the merger will improve the credit rating of the transferring Company resulting in lowering the cost of borrowing, increase operating efficiency, integrating management functioning and will enhance the shareholders value for both the transferee Company and the transferor Company.

The proposed merger is in line with industry trends, which will help achieving scale, size, integration, and enhanced financial strength along with the flexibility to pursue future growth opportunities, both organic and inorganic, within and outside India.

Merger Details:

The appointed date of merger of ANG Auto Pvt Ltd with the Company is March 31, 2007. Under the terms of the proposed merger, shareholders of ANG Auto Tech Pvt Ltd will receive 74 shares of the Company for every 100 shares held by them in ANG Auto Tech Pvt Ltd. The Exchange Ratio has been determined on the basis of Valuation Report of Grant Thornton. The Investment of 75% of the Company in ANG Auto Tech Pvt Ltd will get extinguished and no shares shall be exchanged or issued.

The Equity Capital (Fully diluted) of the Company post merge shall increase from 1,19,02,500 to 1,32,90,000.

Source : Equity Bulls

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