Harrisons Malayalam plans to list STEL within 30-days

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Harrisons Malayalam plans to list STEL within 30-days

In an interview with CNBC-TV18’s Udayan Mukherjee, Pankaj Kapoor, MD of Harrisons Malayalam said the firm is planning to list STEL within a month. "Every Harrison Mal shareholder will get one share of STEL," he informed.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » Harrisons Malay BSE | NSE 23/05/12 Are Mutual Funds betting on Harrisons Malay?

Shares of Harrisons Malayalam were down 28% yesterday after the company went ex-scheme of arrangement. The agro company has a scheme of arrangement with Kerala High Court where one of the subsidiary companies Sentinel Tea and Exports Limited (STEL) is being demerged.

In an interview with CNBC-TV18's Udayan Mukherjee, Pankaj Kapoor, MD of Harrisons Malayalam said the firm is planning to list STEL within a month. "Every Harrisons Malayalam shareholder will get one share of STEL," he informed.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Could you start by telling us about Sentinel Tea & Exports, which is being demerged? What exactly will that company own and hold and what is its line of business?

A: The Sentinel Tea & Exports Limited (STEL) is the investment arm where we have shares in our group companies. Majority of them are listed companies, some of them were unlisted. In STEL now after demerging this company would hold all the investments so all the investments from the HML operations are being separated in STEL. HML would continue to focus on the plantation that is tea, rubber and all other crops they would continue to remain with HML. So only the investment portion is being segregated.

Q: What are these investments in STEL if you could just detail them and what is the current market value of these investments?

A: All these investments are in group companies. Let is say Ceat, Philip Carbon, KEC, CSEC, RPG Life sciences, Saregama so there are shareholding into these companies which was being with HML so far so that will be sitting with STEL now.

Q: What is the approximate market value?

A: As of yesterday evening, the market valuation was about Rs 177 crore for all these investments.

Q: After STEL moves out by how much is the book value of Harrisons Malayalam come down by?

A: I would not have that exact number that how much is the book value. But I do not think that any book value would be coming down per se because this is being adjusted through the revaluation. So my personal feeling is that it wouldn't be much of a difference as far as the HML operation is concerned. It is just that the shareholders will get better valuation, which so far was sitting in HML books.

So all the HML shareholders would be given 1 fully paid up share for every share they hold in HML as of today because today was the record date. So anybody who was having the share as to 30 because as per the T+2 transaction although shares would be sitting in our books or would be coming to our book as of today so everybody would be given one share in this. So all the shareholders in HML they would tend to get the benefit of this demerger.

Q: By when do you expect STEL to be listed?

A: Process is on. It is going to take about a month's time by the time it gets listed in NSE as well as BSE both.

Q: I believe that you had four subsidiaries and three of those entities are being merged back into Harrisons Malayalam. Can you just explain now what HML has left behind with and whether any of the core tea operations even trading operations have moved out with STEL?

A: No, nothing. All those subsidiaries, which were earlier created for different businesses, as per the requirement of time during those periods they were there but majority of them were basically not working. It is only the HMFSL, that was Harrisons Malayalam Financial Services Limited, where the investment were there now all these companies were merged with HML and then the demerging was done in the form of STEL. So STEL was also not doing any trading operation as of now. It is just that the name of the company is STEL where the investment is going to sit in and that is what we are demerging.

Otherwise all the operations whatsoever it is, whether it is tea plantations, rubber plantations all other crops, food crops, spices they continue to remain with HML, and HML would continue to be growing those business.

Q: How is the tea business looking now because we had some weather disruptions, how about prices?

A: Tea prices while everywhere else including the North India prices are looking extremely good. Even the other centers globally like Kenya and Sri Lanka but for some reason South Indian tea prices took a beating in the last couple of month but now they have started improving. In last 2-3 sales auctions, sale prices were showing some improved trends so I expect with some time lag these prices will come back to what they were last year. Otherwise as of now they had taken a beating.