Macrotech Developers clarifies on proposed mergers of 3 listed subsidiaries; Stocks nosedive

27 Jan 2022 , 11:08 AM

Macrotech Developers (Lodha) on Thursday clarified that proposed mergers of 3 listed subsidiaries to proceed only after approval of the majority of the minority shareholders of these 3 companies. These subsidiaries are – National Standard (India) Limited (NSIL), Roselabs Finance Limited (RFL) and Sanathnagar Enterprises Limited (SEL).

On January 25 this year, Lodha’s Board of Directors considered and approved the Scheme of Merger of these three subsidiaries.

Lodha is holing 73.94%, 74.25% and 72.70% of these 3 listed entities respectively.

In its regulatory filing, Lodha said that as a part of its focus on ESG, MDL has been working on simplifying its corporate structure to improve transparency for all its stakeholders. Towards this end, MDL has proposed a merger of 9 unlisted wholly-owned subsidiaries in Dec 2021 and has now proposed a merger of 3 listed subsidiaries.

Further, Lodha said that it is important to note that these 3 listed subsidiaries do not have a material business or future business plan. Two of the three subsidiaries i.e. National Standard (India) Limited and Sanathnagar Enterprises Limited had development projects in the past which have now been completed and they only hold some inventory or investments.

The market capitalization of National Standard (India) Limited (NSIL) was Rs100cr before Covid. It has run up to ~Rs20,000cr now with infrequent trading. The book value of NSIL is Rs225cr.

The merger ratios have been decided as per the Valuation Report provided by Bansi Mehta & Company and Fairness Opinion provided by Kotak Mahindra Capital Company Limited.

The total new equity proposed to be issued by MDL will be ~0.1% of its overall equity base. Hence, these mergers have no material impact on MDL’s shareholders.

The Share exchange ratios as recommended by the Registered Valuer and approved by the Board are as follows:

Roselabs Finance – 8 fully paid-up equity shares of Rs. 10/- each of the Company for every 1,000 fully paid-up equity shares of Rs.10/- each held in RFL.

National Standard (India) – 9 fully paid-up equity shares of Rs.10/- each of the Company for every 100 fully paid-up equity shares of Rs.10/- each held in NSIL.

Sanathnagar Enterprises – 8 fully paid-up equity shares of Rs.10/- each of the Company for every 1,000 fully paid-up equity shares of Rs.10/- each held in SEL.

“As part of the process, the mergers will proceed only after approval of the majority of the minority
shareholders of these 3 companies which are proposed to be merged,” Lodha clarified today.

At around 11.04 am, Lodha was trading at Rs1241.70 per piece down by 3.3% on BSE. Further, National Standard (India) and Sanathnagar Enterprises has hit a 5% lower circuit each, while Roselabs Finance dives nearly 5% on BSE.