Rane Group, the Rs1,400 crore automobile parts major, announced on Monday, the demerger of two of its listed companies, Rane Brake Linings Ltd and Rane Engine Valves Ltd, as part of the final steps taken by the group to segregate the manufacturing and investment businesses.
As part of the demerger, Rane Brake and Rane Engine would emerge as “manufacturing” companies, and their cross holding and investments in other companies would be transferred to the group holding company, Rane Holdings Ltd.
As per the share swap ratio, based on the valuation done by audit firm Ernst and Young, a shareholder holding 100 shares in Rane Brake will get an equal number of shares in the manufacturing company and 75 shares in Rane Holdings.
For 100 shares held in Rane Engine, shareholders will get equal number of shares in the manufacturing company and 56 shares in Rane Holdings.
“Removal of crossholdings would enhance the value of all the listed company’s shares,” said L. Ganesh, chairman of Rane Group.
The demerger, which requires the approval of the Madras high court, will be completed by March 2008.
After the restructuring, the shareholding of Rane Holdings would increase by more than 20% in both the companies, to 52% in Rane Engine and 43% in Rane Brake.