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Snowcem forays into gold manufacturing -- All stock deal with Geekay Exim

Our Bureau

MUMBAI, Nov. 22

SNOWCEM India Ltd has decided to make a foray into gold manufacturing.

The company acquired a gold fabrication and atomizer plant from Geekay Exim Ltd for Rs 50 crore entirely in stock, Mr B.U. Ruia, Chairman and Managing Director, told newspersons here on Wednesday.

In lieu of the acquisition, Snowcem had issued 45 lakh shares at Rs 110 each to Geekay Exim Ltd. ``It is an all stock deal with no cash component,'' Mr Ruia said.

This preferential allotment would increase Snowcem's share capital to Rs 15 crore from the current Rs 10.50 crore.

Geekay Exim would hold about 30 per cent stake in

Snowcem, after a preferential allotment of shares of Rs 10 at Rs 100 premium. However, Geekay would have no say in the management of the company, according to a clause in the agreement between the two companies.

Snowcem's promoters' stake would go down to 32 per cent post-allotment, from the current 52 per cent.

Snowcem would shortly convene an extraordinary general meeting to seek shareholder approval for the acquisition, Mr B.M. Jhaveri, Company Secretary, said.

The company would manufacture gold coins and medallions apart from supplying genuine gold paints to heritage buildings and old monuments through the plant located at Goregaon in Mumbai.``Initially, we plan 100 per cent exports to the Gulf countries. Late r on, we will tap the Indian market,'' Mr Jhaveri said.

The plant can process 2,500 kgs of gold and 18,000 kgs of silver in a year. The company also had long-term plans to enter the jewellery segment.

The company had projected a turnover of Rs 215 crore for the year ended March 2001 (Rs 156 crore).

Snowcem had also entered a joint venture with Snowcem Sri Lanka Ltd as a 50 per cent partner last month. As Sri Lanka enjoyed preferential treatment from SAARC nations, exports to Bangladesh and Pakistan would now be more feasible through the joint ventu re, Mr Jhaveri said.

Snowcem India Ltd had recorded a net profit of Rs 5.35

crore for the quarter ended September 30, 2000, an increase of 30 per cent over Rs 4.14 crore for the same period last year.

The company's turnover for the quarter stood at Rs 36.26 (Rs 35.57 crore). Total expenditure for the quarter was Rs 60.60 crore (Rs 59.14 crore).

Net profit for the half-year ended September 2000 was Rs 8.75 crore (Rs 7.34 crore) while turnover for the period was Rs 70.52 crore (Rs 58.08 crore).

Interest payments for the quarter came down by 600 per cent to Rs 0.32 crore (Rs 2.27 crore). Interest payment for the half-year ended stood at Rs 30.5 crore (Rs 24.91 crore).