CompanyWatch-NIRLON Ltd (Spinning of unit into JV with Austrian firm)
Company Website:
nirlon.com
Nirlon plans to spin off wing into joint venture with Austrian firm
Anju Ghangurde
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Mumbai, Sept 5: The loss-making Nirlon plans to spin off its conveyor belting division into a joint venture with Austrian multinational Semperit AG. The $450 million Semperit, with interests in hydraulic hoses, medical gloves, conveyor belts and moulded components, will take majority control in the proposed joint venture company.
Nirlon's conveyor belting unit manufactures textile-reinforced rubber conveyor belts and has been languishing due to sluggish demand and stiff competition from small scale units in the country. The small scale units, Nirlon claims in its latest annual report, benefit from reduced power costs, concessional government levies and lower manpower costs.
The company is seeking shareholder approval for "transferring and/or disposing of the entire business, all rights, title and interest in respect of the lands, including the leasehold right thereto and all the movable and immovable properties, including building, factory sheds/structure, godown, plant and machinery, tangible/intangibleassets of whatsoever nature comprised in the conveyor belting division of the company at Roha, Maharashtra, to the proposed joint venture company, Sempertrans-Nirlon Pvt Ltd".
The proposed joint venture will focus on manufacturing conveyor belts and related products and the Austrian partner will provide the technical knowhow, according to the report. The Mumbai-based Nirlon will, on its part, contribute a substantial part of the fixed assets of its existing belting division in Roha to the venture. The fixed assets of the existing V-belt unit will, however, be excluded from the scope of the proposed joint venture company.
Nirlon says that the joint venture is necessary to be competitive and to gain access to international markets and improved technology. "To maximise this division's future potential, it is absolutely necessary to have the required specialised knowledge, expertise and the substantial capital investment to achieve the desired level and quality of cost-effective operations," the reportadds.
Meanwhile, the company has recently stopped operations at its nylon textile division and plans to launch a voluntary retirement scheme (VRS). "The stoppage of the nylon textile plant ideally should be followed with a reduction of manpower that will be rendered surplus as a result of the cessation of operations. The company has plans to implement a VRS but is constrained by the lack of funds at this time, " the report adds. The Rs 175 crore Nirlon, currently in the midst of implementing a rehabilitation scheme sanctioned by the BIFR, has prepared its accounts on the assumption of being a "going concern".
(Financial Express) |
