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    RHI Magnesita's two Indian businesses merge with Orient Refractories Limited

    Synopsis

    “From the material on record, the Scheme of Amalgamation appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to the public interest,” NCLT bench headed by justices Suchitra Kanuparthi and Rajesh Sharma passed the order dated 5th of May.

    merger-indiAgencies
    The proposed amalgamation will lead to simplification of the corporate structure and consolidation of the India businesses of the RHIM group,
    The National Company Law Tribunal (NCLT) has approved the scheme of amalgamation of Indian subsidiaries of RHI Magnesita, a global refractory manufacturing company that will make the two subsidiary companies RHI Clasil and RHI India to be merged into the public listed entity Orient Refractories Limited (ORL).

    “From the material on record, the Scheme of Amalgamation appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to the public interest,” the bench headed by justices Suchitra Kanuparthi and Rajesh Sharma passed the order dated 5th of May.

    “Since all the statutory compliances have been fulfilled… this bench hereby sanctions this Scheme in its absolute terms,” the order statement said.

    ORL had approved the proposed scheme in its board meeting on 31 July 2018 and the proposed scheme was also approved by the shareholders (including the public shareholders) and creditors of ORL on 17th of May 2019.

    Subsequently, all necessary regulatory and statutory approvals were obtained, and the scheme was filed jointly by the three companies with the NCLT Mumbai for its approval.

    However, in an order issued on 2 March 2020, the NCLT rejected the proposed scheme on the grounds that the appointed date of the amalgamation and the valuation dates were different and the court said that the scheme was against public policy.

    “After carefully assessing the details of the order issued by the NCLT, ORL decided to file an appeal before the National Company Law Appellate Tribunal (NCLAT). The NCLAT by an order dated 19 January 2021, set aside the order passed by the NCLT rejecting the scheme and directed the NCLT to approve the scheme,” said the company in a media statement on Wednesday.

    The rationale for the Scheme as per the order is that the proposed amalgamation will lead to simplification of the corporate structure and consolidation of the India businesses of the RHIM group, establishing a comprehensive refractory product portfolio and improving the allocation of capital and optimising cash flows contributing to the overall growth prospects of the combined company.

    “The integration of the three separate legal entities would now enable us to synergize, simplify and consolidate our strength in India to serve our ever-growing customers better,” said Parmod Sagar, managing director of ORL.

    RHI Magnesita is going to provide customers with one single refractory solutions platform offering the industry’s most comprehensive product and solutions portfolio as an end to end solution provider, he added.

    The Board of Directors of ORL will decide on the further course of action related to the amalgamation, including fixing the effective date of the amalgamation, in its next meeting.

    “The integration also results in an improved allocation of capital and optimization of cash flows contributing to the overall growth prospects of the newly integrated company, creation of a larger asset base and facilitation of access to better financial resources; and enhancement of shareholder value pursuant to economies of scale and business efficiencies,” Sagar said.




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