ADL foreign stake increases

NEW DELHI, MARCH 16: Three foreign collaborators are hiking their collective stake in American Diamonds Ltd ADL to over 60 per cent from t...

NEW DELHI, MARCH 16: Three foreign collaborators are hiking their collective stake in American Diamonds Ltd ADL to over 60 per cent from the existing 51 per cent. The foreign companies are Steelmet Pte Ltd of Singapore and Instile Stone Corporation and Atlantic Diamonds Inc, based in the US.

The company is a 100 per cent export oriented unit EOU engaged in the manufacture of synthetic industrial diamonds. The foreign equity in American Diamonds Ltd will amount to 60.11 per cent, while the domestic holding will drop to nearly 40 per cent.

The Foreign Investment Promotion Board has also okayed a lump sum payment of Rs 6.5 crore as technical know-how fee to Atlantic Diamonds Inc, which will provide capital goods to the company without any price escalation. The board of directors has already passed a resolution for the hike in foreign equity, as well as payment of lump sum knowhow fee to the foreign collaborator.

The foreign equity amounts to Rs 37.46 crore in the company8217;s paid up capital of Rs 62.33crore. The authorised capital of the company is Rs 70 crore.

Steelmet Pte Ltd, which holds 38.25 per cent amounting to Rs 23.84 crore of the company8217;s equity will now hold 45.07 per cent amounting to Rs 28.09 crore.

Instile Stone Corp which holds 7.65 per cent amounting to Rs 4.77 crore will now hold 9.02 per cent amounting to Rs 5.62 crore.

Atlantic Diamonds Inc which currently holds 5.1 per cent amounting to Rs 3.18 crore will hold 6.02 per cent amounting to Rs 3.75 crore.

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American Diamonds had received Foreign Investment Promotion Board approval late last year to set up an export oriented manufacturing facility for synthetic industrial diamonds at Ganjam in Orissa with an annual capacity of 64,63,800 carats.

The approval was subject to the condition that the company will export its entire production, excluding rejects and sales in the domestic tariff area DTA for a period of five years.

In its recent application to the FIPB, the company has said that the increase in foreign equity is on thelines of the suggestions made by the Industrial Finance Corporation of India, which is appraising the project.

The company has also said that the technical collaborators will charge only the technical know-how fee and no royalty on exports as well as domestic tariff area sales.

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Further, the board did not have any objections to the proposal as 60 per cent of the produce would be bought back under the arrangement on a long-term basis.