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NT Bureau
Chennai, Aug 21:
 

Rane group chairman L Ganesh and Rane Holdings Ltd chairman Harish Lakshman at a press meet in Chennai yesterday.

        Rane group, the Chennai-based manufacturer of auto-components, has embarked on the second phase of restructuring its share holdings of group companies under Rane Holdings Ltd (RHL).

        The entire process of removing cross-holdings between Rane companies would be completed by March 2008. Through a two-phase exercise of restructuring the share holdings in group companies, Rane would consolidate all investments under RHL to facilitate value-creation for shareholders, said L Ganesh, chairman, Rane group. The first phase of consolidation was undertaken in April 2004 and through a process of demerger of the then composite Rane Madras Ltd (RML), a new holding company RHL was created, thus removing cross holdings in RML.

        Now the second and final phase of consolidation had begun from March 2007 which would eliminate the residual cross-holdings through a process of restructuring Rane Brake Linings Ltd (RBL) and Rane Engine Valves Ltd (REVL).

        The boards of RBL, REVL and RHL at a meeting yesterday had approved the scheme of demerger of manufacturing units of RBL and REVL into two separate companies which would be listed shortly and the subsequent merger of rest of their business, mainly investments into RHL. It was agreed that for every 100 shares held in RBL and REVL, the shareholder would be allotted the equal number of shares in the new manufacturing companies. Additionally, the shareholders of RBL and REVL would be issued 75 and 56 shares respectively in RHL for every 100 shares they possess. The restructuring exercise which would be approved by the High Court was expected to be completed by March 2008. The promoters' share in RHL would come down from the present 70 per cent to 50 per cent after the completion of share transfers and consolidation.

        'Removal of cross holdings in Rane group would enhance the value of our listed companies. Besides, it would unleash opportunities for growth and open up new avenues for enhancing technology through joint ventures and collaboration,' Ganesh explained. He informed the capital base of Rane group would increase from Rs 9.8 crore to Rs 14.5 crore which would give RHL much elbow room to plan for expansion. In the fiscal 2008, Rane group has set aside Rs 250 crore for capital expenditure and the two plants in Tiruchi would be commissioned as per schedule, he said.

        On a broader front, Ganesh said the first quarter of the current fiscal had seen only a moderate growth in commercial vehicles, two-wheelers and farm tractors, while the exports were hit by strong appreciation of rupee versus dollar in the short-term. 'We may resort to hedging to offset the rising value of rupee in the export front. Rane group will also raise funds through ECB (external commercial borrowings) worth $11 million for RML and REVL,' he said.

        Ganesh said Rane group was exploring opportunities to expand its product portfolio through development of technology as part of its R&D efforts, forging technical partnerships and scouting for acquisitions. With a market capitalisation of Rs 1,095 crore, the Rane group has a turnover of Rs 1,400 crore out of which 12 - 13 per cent was from exports to mainly US and Europe.