GTC Industries to Demerge Realty, Tobacco Businesses

Source from:  epaper.timesofindia.com Our Bureau NEW DELHI  03/05/2008

CIGARETTE manufacturer GTC Industries has announced that its board of directors has considered and granted in-principle approval to demerge the tobacco business and the real estate business into two separate entities. The demerged entities would be listed separately on the stock exchanges in India. ET had first reported plans of a demerger of the real estate business last November. The stock price, in anticipation of such a move, had risen 38% during February to close at Rs 499.75 at the BSE on Friday. Commenting on the development, GTC Industries chairman Sanjay Dalmia said: "The demerger would unlock unique shareholder value across both verticals, tobacco as well as real estate. The company is in the process of examining various options for working out a suitable scheme of demerger keeping the interest of the shareholders in mind." As reported earlier, GTC Industries has been looking to demerge its real estate assets spread across Mumbai, Baroda and Hyderabad into a separate company. The demerged entity would then become a real estate development company while GTC would remain the cigarette manufacturer with brands like Panama and Chancellor. The demerged company would form joint ventures and develop real estate assets. The real estate assets include 7.5 acre land at Vile Parle in Mumbai where the company has a factory. It is expected that this plant would be either shut down or relocated to some other production unit of the company. The Vile Parle land is expected to be used for construction of a mall. In addition, GTC has a 2.75-acre plot in Hyderabad, which is being developed into a mall and a fourscreen multiplex. GTC would own 50% of the built-up area of the property and the joint venture partner would put in the entire investment to develop the property. Apart from this, the company may also develop a part of the Baroda facility in Gujarat, which is located close to the airport. Enditem