JK Industries absorbs Vikrant

JK Industries has rolled in major changes. Its Rs 600-crore subsidiary Vikrant Tyres will be merged with JK Industries, making the merged entity JKI a Rs 2,500-crore company. Also, the Rs 100-crore JK Agro-Genetics and Rs 100-crore JK Sugar have been demerged into separate subsidiary companies which will shortly be listed on stock exchanges. As a result of these two moves, JK Industries has become a complete tyre business of the Singhania group. While Vikrant will now cease to exist as a company, it will be a brand alongside JK Tyre.

JKI shareholders will receive proportional shares in JK Sugar and JK Agri-Generics along with their existing holding in JKI. Also, for every 100 shares owned in Vikrant, shareholders will receive 45 shares in JKI, a proportion of 9 shares in JK for every 20 shares held in Vikrant.

8220;The benefits of this merger is that now JKI will be solely a tyre producing company and will reap the benefits of integrated size, scale, logistics and resources from the four merged production facilities,8221; said JKI chairman Hari Shankar Singhania.

Post-merger with Vikrant, JKI will have a consolidated long-term debt of Rs 400 crore with immediate plans to restructure the debt. JKI8217;s operating margins are currently Rs 200 crore, and is expecting to notch up sales of Rs 5,000 crore by 2006. JKI will be investing a further Rs 150 crore to increase capacity by 40 per cent over the next two years. The company is also currently scouting for more low-cost outsourcing production bases in Latin America, South East Asia and East Europe.