Goenkas to bring tyre businesses under Ceat roof  ( March '20,2003, ET)

The Goenkas of RPG Enterprises are restructuring its tyre manufacturing company Ceat. The move is aimed at bringing the group’s tyre-related businesses under one company.

The group plans to merge the rubber plantation division of group company Harrisons Malayalam (HML) with Ceat. Simultaneously, it will divest the non-tyre assets of Ceat to one of the group’s non-banking financial subsidiaries.

While HML will be able to focus more on tea and other food related agro products, its board is planning to merge its financial subsidiary Harrisons Malayalam Financial Services and all other non-operational subsidiaries with itself.

A decisions were taken at a board meeting held on Wednesday and they were communicated to the stock exchanges later.

The company said, in its notice to the stock exchanges, that the board of Ceat has approved the proposal for merging the rubber division of HML with itself.

The board also considered a proposal to divest the company’s non-tyre assets, mainly financial assets like investments, to one of its non-banking financial (NBFC) subsidiaries to consolidate such assets.

Elaborating on the issue, RPG group chairman Harsh Goenka said: “The objective of these proposals is to explore the possibility of strengthening the operations of both Ceat and HML.”

While the demerger of the rubber division from HML will enable it to focus on its core business area of tea, its merger with Ceat will improve the company’s option for sourcing raw material for its tyre manufacturing activities and bring about a synergetic effect, Mr Goenka pointed out.

“On the other hand, the spinning off of all non-tyre assets of Ceat into a separate company will make it more focused on its core business of tyres,” he said. The scheme, if implemented will help build value for the shareholders of both the companies, Mr Goenka observed.

The boards of the two companies, in two separate meetings, appointed consultants and valuers for finalising the mergers. The companies will seek the requisite approvals after the recommendations of the consultants and valuers are accepted by the respective boards.