Nirmal Floratech -- Let it wither

Recommendation: Reject

Anup Menon

THE company has not been operational due to the inability of the existing promoters to implement its original project.

Further, the stock has not been frequently traded. Given these factors, there is a strong case for tendering to the offer. But, on the other side of the coin, the new promoters intend to diversify into information technology. This may lead to an improvement in the valuation and liquidity of the

stock and, thus, provide returns for the existing shareholders.

GT Business Solutions along with Mr. D. Surendranath Reddy made an open offer to acquire 15,99,000 fully-paid equity shares of Nirmal Floratech Ltd at an offer price of Rs. 4.50 per fully paid-up share of the company. The acquirers have now decided to double the offer price to Rs. 9 per fully paid-up share. The size of the offer at Rs. 1.43 crores represents 20 per cent of the paid-up capital of the company.

The acquirers plan to diversify into the information technology sector. Since Nirmal Floratech is a listed company, it helps the acquirers in terms of their ability to raise funds and offer stock options to the employees. Hence, the acquisition can be considered as a strategic move from the point of view of the acquirers.

Features

The offer is to buy out 20 per cent of the paid-up equity of Nirmal Floratech Ltd at Rs. 9 per share.

The offer is unconditional and on a cash basis.

Date of opening of the offer: March 27.

Date of closure of the offer: April 25.

Managers to the offer: Nagarjuna Financial Services Pvt. Ltd.

Listing: The stock is listed on the Calcutta Stock Exchange, Hyderabad Stock Exchange and the Jaipur Stock Exchange.