Tushar's Stock Tips: April 2007

Saturday, April 21, 2007

VIP Industries

VIP Industries Ltd has informed BSE that the Company has filed the Order of the Hon'ble High Court of Judicature of Bombay at Mumbai, with the Office of the Registrar of Companies, Maharashtra, on February 01, 2007. As per the terms of the Scheme of Amalgamation and Arrangement between the Company and Blow Plast Ltd, the Effective Date is therefore February 01, 2007.Further the Company has informed that Blow Plast Ltd has also filed the Order of the Hon'ble High Court of Judicature of Bombay at Mumbai with the Office of the Registrar of Companies, Maharashtra, on February 01, 2007. Accordingly, Blow Plast Ltd stands dissolved without having been wound up with effect from February 01, 2007, in terms of the aforesaid Order of the Hon'ble High Court.

A news from the Hindu

Unlocking Value thtough Amalgamation

Explaining the rationale behind the merger, Dilip Piramal, chairman, VIP Industries said, that "We would achieve optimum utilisation of various infrastructure and service facilities and integrate our management activities, thus achieving reduction and better control of costs. The merged entity would emerge as a leader in the global luggage industry, leveraging on innovation and a strong marketing strategy." Post merger, the combined entity’s worth would be about Rs 500 crore. VIP Industries reported a total income of Rs 335.12 crore and net profit of Rs 8.78 crore for the financial year ended March 31, 2006. Blow Plast has reported total income of Rs. 259.28 crore and net profit of Rs 6.74 crore for the year ended March 31, 2006.

Further, the merged entity would have exclusive showrooms and will operate in over 50 countries with manufacturing operations in Uttranchal and Nashik in India. The proposed share exchange ratio has been approved based on a valuation exercise conducted by PriceWaterhouseCoopers. Sudhir Jatia, managing director, Blow Plast said, "There will be better resource mobilisation and financial consolidation to withstand competition from domestic as well as overseas markets. Also, consequent to launch of commercial production from Uttaranchal factory, profitability of the merged entity will improve on account of exemptions from excise and Income Tax." Blow Plast has a 60 per cent share in the organised market for luggage in India. It has 8,000 retail outlets across the country.

I feel that the merger will unlock value.

If you study the charts
TG1- Rs 150 in next 6-10 months
TG2 - Rs 230 in 20-24 months

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