Karsanbhai and other promoters, who hold 77.17% of paid up equity shares, propose buying 3.63 crore equity shares of the company from the public.
Nirma Ltd, promoted by well-known entrepreneur of Gujarat, Karsanbhai Patel is now willing to de-list from the stock bourses.
In the board meeting on Saturday, Karsanbhai and other promoters proposed buying 3.63 crore equity shares of the company from the public and seeking to de-list the equity shares from the stock exchange of India.
As on date, Karsanbhai and other promoters, together hold 77.17% of the paid up equity share capital of the company. Nirma was incorporated in 1984, was listed in 1994 and today has a market capital of more than Rs3,571 crore. On consolidated basis, as on March 31, 2010, the total income of the company is Rs4,696 crore and gross fixed assets stands at Rs5,032 core. The share capital and reserves of the company is Rs79.57 crore and Rs2,746 crore respectively.
After the board meeting, the company had also informed about its proposal to both the exchanges - Bombay Stock Exchange and National Stock Exchange. The company's main line of business is soaps and surfactants. Pharma and processed mineral businesses are relatively recent additions. And currently, Nirma is implementing green field cement plant. Promoters' other business interests include castor seeds, chemicals, packaging and real estate.
Nirma's name is synonymous with Karsanbhai Patel. His path-breaking and path-setting journey has propelled Nirma of yesteryears into a multi-location, multi product $1 billion revenue
corporate with operations in India and US.
Beginning with placing the detergents powder into common man's reach, 40 years of Nirma span distinct phases. Umbrella branding and backward integration, key pillars of Nirma's success, received universal acceptance as an alternate market strategy. Incorporation of Nirma Limited in 1984, paved the way for consolidation of operations leading to listing of the company in 1994. Today, nine manufacturing locations of the company serve four continents globally and 37% of total income is generated overseas. Since the last 14 years, the company has rewarded its shareholders with dividends and attractively priced right issue, while funding its business growth from internal generation.
Apart from opportunities available from existing businesses, the company continues to research for options of diversification into related and moderately unrelated areas. The business model of the company, however, continues to center around leveraging cash flows from ongoing operations to invest in assets presenting possibilities of turnaround or forward or backward integration.
Over the years, there has been a significant change in the business mix of the company, as a result of which, the risk profile, investment needs and returns ratios of the company have changed quite significantly and materially from the time of its initial listing. From a business that was primarily focused on consumer products at the time of its listing, the company has diversified into other areas like linear alklyl benzene, soda ash, pharmaceuticals and others.
As a result, the company's business has become more complex and asset-heavy. This is reflected in the fact that the company's fixed assets turnover ratio has reduced from 7.76 in 1993 to 1.82 in 2010. With the changing economic environment, the profile of the company has changed and the acquirers believe that profile of the business of the company is likely to further change towards entering into select early stage and capital intensive businesses and the nature and risk profile of these businesses may not be easily understood by and appropriate for non-promoter investors.
Further, such new businesses may also have long gestation periods which are normally not acceptable to public market investors. Therefore, the acquirers are of the view that the next phase of the company's life cycle can be better managed as an unlisted company. The acquirers also believe that it is this changing nature of the business of the company that has led to market valuations of the company to be valued as diversified conglomerate, rather than as a consumer products company or at a valuation that reflects the sum of its parts. The acquirers believe that given the low trading liquidity in the stock, the delisting offer should provide investors with an opportunity to get an exit at a fair value, while according the company the flexibility to carry on its operations.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}