Shareholders of CHI Investments Ltd are unhappy over the RPG Group’s decision to merge four companies with a subsidiary. They feel that the valuations done under the proposed merger are unfair
Last year, the RPG Group decided to merge four companies—Summit Securities Ltd, Brabourne Enterprises Ltd, Octav Investments Ltd and CHI Investments Ltd—with RPG Itochu Finance Ltd (RIFL), a 100% subsidiary of RPG Enterprises. However, minority shareholders of CHI Investments Ltd are not happy with the proposed merger and are raising questions over the rationale of valuations done under the proposed amalgamation.
RIFL is an unlisted firm. The new entity will be rechristened Summit Securities Ltd, which would be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Summit Securities Ltd (earlier known as KEC Infrastructures Ltd) was incorporated in 1945. The company is involved in design, manufacture, supply and construction of power transmission lines. Shares of CHI Investments Ltd have been suspended from trading since 3rd February due to the proposed merger.
“I am holding some shares of CHI Investments. The company is proposed to be merged with RIFL and prima facie (the move) does not appear to be fair with minority investors. I think there will be significant erosion in the value of investments in CHI Investments if the merger ratio is not changed,” said an investor, preferring anonymity.
The valuations were carried out by auditing firm Grant Thornton.
The Board of directors gave their approval for a share-exchange ratio of one equity share of RIFL of Rs10 each for six equity shares of CHI of Rs10 on 10 July 2009.
In the case of Summit, one share of RIFL will be issued for every 16 shares held in Summit, while one share of RIFL will be issued for every 28 shares held in Brabourne. Reportedly, a number of minority investors believe that the valuations are unfair.
Maintaining that the company is not considering revising swap value ratio, RPG group in an email said, “The scheme has already been implemented. The question of revising swap ratio does not arise for the simple reason they are determined by independent reputed valuers and approved by the Stock Exchanges and the High Court before being implemented.”
The company feels that the merger would benefit the companies by reducing overall administration costs and bring in more efficiency.
Incorporated in 1997, RIFL is engaged in hire-purchase, car leasing, commercial vehicles, construction equipment and textile machinery.
Post merger, RIFL’s authorised share capital will increase to Rs180 crore from Rs30 crore.An email query sent to CHI Investments remained unanswered till the time of writing.
Asset prices for second-hand vessels in the dry bulk and tanker segments are currently going up. However, industry sources believe that players are in a wait-and- watch mode, and the rise may be a temporary phenomenon
After shipping asset prices bottomed out a few months back, a marginal rise of 8% to 10% has been witnessed in the asset prices for second-hand vessels in the tanker and the dry bulk segments. However, industry experts indicate that this could be a temporary situation, and is likely to change with the current volatility in the global economy.
The global slowdown had led to a number of cancellations for new orders placed with the shipbuilding industry. A significant drop in shipping asset prices was also witnessed last year. Asset prices in the tanker segment fell by nearly 40% from their peak in 2008. Similarly, the dry bulk segment took a hit of nearly 70% from its peak in 2008.
Now, with some signs of revival in the global economy, asset prices have moved up by around 8% to 10% from the bottomed-out rates. “Asset prices have slightly moved up, the movement is already visible with around 8% to 10% rise,” said Vinay Kshirsagar, CFO, Shreyas Shipping and Logistics Ltd.
An official from Great Eastern Shipping (GE), which has always timed its asset purchases during a fall in asset prices, has also confirmed the trend. “Yes, asset prices have surely shown some improvement,” said an official.
However, this revival in asset prices could very well be a temporary trend. “The revival in asset prices was expected with the economy coming back on track. Asset prices for second-hand vessels are already on a rise. However, the future trend will depend on the economy. With new issues coming up in Europe, shipping will also be affected. The industry is closely related to how the global economy performs,” said SS Kulkarni, general secretary, Indian National Shipowners’ Association.
“Going forward, if Chinese trading activities slow down, the entire dry bulk momentum will come to a halt. It is very difficult to predict whether the trend would continue or not. It should be a temporary phase; we expect a fall in prices. Though there may be a fall, it will not reach the levels at which prices had bottomed out,” added the GE official.
The installations of unlicensed software on personal computers have fallen, but the dollar losses caused by software piracy continue to remain in the $2-billion range
BSA-IDC has said that more people are opting for licensed software, bringing down piracy levels to 65% in 2009 from 68% a year ago, reports PTI.
While the PC software piracy rate, or installations of unlicensed software on personal computers (PC), has fallen, the dollar losses caused by software piracy continued to remain in the $2 billion range.
"About 40% of the desktop PCs sold in India continue to be white boxes (assembled), but the drop in piracy levels shows that people are now opting for legal and licensed software over the pirated ones," BSA vice-president and regional director, Asia-Pacific, Jeffrey Hardee told reporters over a conference call.
The report, in its seventh edition, tracks PC software piracy rates in more than 100 economies worldwide.
The IDC study found that even though piracy levels remain high, anti-piracy education and enforcement campaigns spearheaded by the software industry, governments and law enforcement agencies have made commendable progress in bringing down piracy rates.
"In India, we have made significant progress in further bringing down the piracy rates as compared to 2008. However, our annual commercial value of unlicensed software still stands at a whopping $2.03 billion," Keshav S Dhakad, chair of the India BSA Committee, said.
BSA has taken up various initiatives with the state governments of Karnataka and Maharashtra, as well as with FICCI, and the Department of Industrial Policy and Promotion, Ministry of Industry and Commerce, and Ministry of Small and Micro Enterprises, toward increasing awareness about benefits of using licensed software and protecting indigenous information technology (IT) innovation opportunity.
Global PC software piracy has dropped in 54 of the 111 countries studied, but the worldwide piracy rate has risen from 41% in 2008 to 43% in 2009, due to exponential growth in PC software deployments in emerging economies.
The US, Japan, and Luxembourg continue to hold the lowest piracy rates of economies surveyed (20%, 21%, and 21% respectively), while Asia-Pacific economies with the highest piracy rates include Sri Lanka, Indonesia, Vietnam and Pakistan.
The 2009 BSA/IDC Global PC Software Piracy Study covers piracy of all software that runs on PCs, including desktops, laptops, and ultra-portables, including netbooks. This includes operating systems, systems software, such as databases and security packages, and applications software.