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IFL board reconstituted -- Malco to take controlling stake in India Foils

Our Bureau

CALCUTTA, March 30

THE board of directors of India Foils Ltd (IFL), at its meeting held here on Thursday, approved allotment of equity shares and warrants to Madras Aluminium Company Ltd (Malco), a Sterlite group company having its registered office at Salem, Tamil Nadu.

The allotment will be of 110 lakh equity shares of Rs. 10 each at a price of Rs. 23.50 per share (inclusive of premium), and 100 lakh warrants (entitling holders to apply for and get one equity share of the face value of Rs. 10 each convertible at a pric e of Rs. 23.50 per share.

As a result of this allotment, and after full conversion of warrants, Malco will have an equity stake of 55 per cent in IFL, and the management control of the company will rest with the Anil Agarwal-controlled Sterlite group, according to a press note is sued by IFL here on Thursday.

The IFL board has been reconstituted, and all the existing members, other than Mr. A. Khaitan, Dr. P.K. Basu (ICICI nominee) and Mr. Amit Ray, Managing Director, have resigned. Mr. Naveen Agarwal, Mr. Tarun Jain, Mr. S.C. Krishnan and Mr. Agnivesh Agarwa l have been appointed as nominees of Malco on the IFL board.

This concludes the strategic alliance deal between the two companies, first announced on December 7, 1999, and the approval by the IFL shareholders on December 31, 1999. The issue of shares and warrants was expected to bring in proceeds of nearly Rs. 50 crores, and to be utilised for augmenting long-term working capital, capital expenditure for increase of production and value addition and debt reduction.

Emphasising the Rs. 3,000-crore Sterlite group's interest in the aluminium industry, Mr. Agarwal said ``we will progressively grow and integrate our aluminium business, and will concentrate on value creation for our customers and maximise shareholder val ue.'' Stating that IFL would continue to maintain its own identity, he said its strong brand equity and market presence would be enhanced nationally and globally.

IFL already has metal sourcing arrangements with Hindalco and Nalco, and these are set to continue. Sterlite is a major player in the copper business, with significant presence in sectors such as telecom cables and optic fibre, and now owns Malco, an int egrated aluminium producer with a capacity of 35,000 TPA.

IFL's flexible packaging business will be further developed and capability enhanced. According to Mr. Agarwal, the two companies would be working closely together to eliminate IFL's key weakness in the area of finance. The alliance is expected to signifi cantly reduce external borrowings and interest costs, identified as the key factors behind IFL's poor financial performance in recent years.