Indo Count Industries Ltd — M&A Activity 2020

Oct 21, 2020

October 21, 2020

National Stock Exchange of India Ltd. Listing Department Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai - 400051

BSELimited Department of Corporate Services Floor 25, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400001

Company Symbol: ICIL Scrip Code No.: 521016

Dear Sir/Madam,

S!.!.b.i.ect; Scheme of Amalgamation of pranavaditya Spjnning Mjlls Limjted. Subsidiary of Company ("Transferor Company! pSML·) with Indo Count Industries Limited ("The Company! Transferee Company! ICIL") and their respective Shareholders

We wish to inform you that at the Board Meeting held today i.e. on October 21, 2020, the Board of Directors of the Company has approved the Scheme of Amalgamation of Pranavaditya Spinning Mills Limited, Subsidiary of Company ("Transferor Company/ PSML")with Indo Count Industries Limited (The Company/ Transferee Company/ ICIL") and their respective Shareholders ("Scheme") under Section 230 to 232 read with other applicable provisions of the Companies Act, 2013 and Rules framed thereunder.

In consideration for amalgamation of PSML with ICIL, in terms of the Scheme and based on the valuation report issued by AZR & Associates, Independent Chartered Accountant & Amit Kumar Singh, Registered Valuers and fairness opinion report issued by Ernst & Young Merchant Banking Services LLP,a Category-I Merchant Banker, ICIL will issue and allot 2 (Two) fully paid up equity shares of Rs.2/- each to the Equity Shareholders of PSML,for every 15 (Fifteen) fully paid up equity shares of Rs.10/- each held by them in PSML.

The equity shares of ICIL to be issued to the Shareholders of PSML shall be listed on the BSELimited and the National Stock Exchange of India Limited ('Stock Exchanges') (subject to trading permission being granted by the Stock Exchanges). The Scheme would be subject to approval of the National Company Law Tribunal (Mumbai Bench), Stock Exchanges, Securities and Exchange Board of India (,SEBI') and various Statutory Approvals, Shareholders of each of the companies, as may be directed by the Hon'ble National Company Law Tribunal.

The details as required under SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015 read with SEBICircular Ref. No. CIR/CFD/CMD/4/2015 dated September 9,2015 are given in Annexure to this letter.

You are requested to take the above on record.

Thanking you,

Yours faithfully,

For Indo Count Industries Limited &~~ ~

Enc!.:A/a

Indo Count Industries Ltd

Head Office: 301, Arcadia, 3rd Floor, Nariman Point, Mumbai - 400 021, Maharashtra, India; T: 0224341 9500, F: 022 2282 3098 Marketing Office: Dosti Imperia, 2nd floor, Manpada, Ghodbunder Road, Thane (w) - 400607, Maharashtra, India;T: 0224151 1800, F: 0222172 0121 Home Textile Division: T3, Kagal - Hatkanangale Five Star, MIDC Ind.Area, Kolhapur - 416216, Maharashtra, India; T: 0231 6627900, F: 0231 6627979 Spinning Division: 01, MIDC, Gokul Shirgaon, Kolhapur - 416234, Maharashtra, India;T: 0231 2687400, F: 0231 2672191 Regd. Office: Office No.1, Plot No. 266, Village Aile, Kumbhoj Road,Taluka Hatkanangale, Dist. Kolhapur - 416 109, Maharashtra, India; T: 0230 2463100 12461929 CIN: L72200PN1988PLC068972, E: info@indocount.com, W: www.indocount.com

Annexure

Sl. No.	Details to be provided	Information
l.	Name of the entities formingPartofthe	1. Transferor Company: Pranavaditya Spinning Mills Limited
	amalgamation/merger,detailsin brief such as, size,	Il.Transferee Company: Indo Count Industries Limited
	turnover, etc.	PSMlis the subsidiary companyof ICIl, whereinICIlholdsill.1,43,41,280 equity shares of face value Rs. 10/- each of PSMLrepresenting 74.53% of paid up share capital of PSML.
		IV.Revenue from operations for Financial Year ended 31st March,2020:
		ICIL: INR 1965.07 Crores (standalone) & INR 2080.13 Crores(consolidated)
		PSMl: INR 69.41 Crores
		Date: 1't October,V.Appointed2020 orsuch otherdateasdirected by the Mumbai Bench of the National Company lawTribunal ("NClT").
2.	Whether the transaction wouldfallwithinrelatedpartytransactions?If yes, whetherthesameis doneat'arm'slenqth'	Yes, the transaction would fall within related party transactions andis done at 'arm's length'. Pranavaditya Spinning Mills Limited is thesubsidiary of Indo Count Industries Limited.
3.	Area of business of the entities	ICIlis engaged in the business of manufacturingand tradingof
		home textile products. PSML has been carrying out the business ofmanufacturina of cotton yarn.
4.	Rationaleforamalgamation/merger	Pranavaditya Spinning Mills Limited (PSML/ Transferor Company) isa subsidiary of Indo Count Industries Limited ('the Company'/ ICILITransferee Company) wherein the Company holds 74.53% of equityshare capital of PSML.The main business of PSML is manufacturingof cotton yarn. It has a huge freehold land viz. 34 acres in Kolhapurwhich is proximity to Company's manufacturingfacilities and otherresources which are in excess of the current business requirementsof PSML.The main operations of ICIl is its home textile business,which is continuouslyinvesting in facilities to supportits businessneeds. ICIl needs additionalspace and infrastructure to expand itsmanufacturingactivities,whichPSMlcan readilyprovide.Thisarrangementis thus mutually beneficial. The land, machinery andother resources available with PSML can be utilized in cost effectiveand efficient manner to carry out Company's business expansion.The amalgamation of PSML and ICIL would inter alia have followingbenefits:a.Consolidationof the Transferor Company and the TransfereeCompany will achieve simplified corporate structure, rationalizethe number of listed entities and result in a single listed entitywith combined businesses.
		b.Provide an opportunityto leverage combinedassets and builda stronger sustainable business. Specifically, it will also enableoptimal utilizationof existing resources which are in excess ofthe current business requirements of the Transferor Companyand provide an opportunityto fully leveraqe assets, capacities,

		experience and infrastructureof the Transferor Company andTransferee Company.
		c.Reducing managerial overlaps involved in operatingmultipleentities, enable cost savings and effective utilization of valuableresources which will enhance the managementfocus therebyleading to increase in operationaland management efficiency;integratebusinessfunctions;eliminateduplicationandrationalizationof administrative expenses.
		d.Synchronization of efforts to achieve uniform corporate policy,greater integrationand greater financial strength and flexibilityfor the Transferee Company.
		e.Better value creation for the shareholders of both the companiesenabling the public shareholders to hold shares ofthe combinedlisted entity.
		f.Upon completion of the amalgamation, the Transferor Companywill be dissolved. Consequently, there would be lesser regulatoryandlegalcomplianceobligationsincludingaccounting,reporting requirements, statutory and internal audit compliancerequirements,taxfilings,companylawcompliances,StockExchangecompliancesetc.andthereforereductioninadministrative costs.
5.	In case of cash consideration -amountorotherwiseshareexchange ratio	The considerationis in the form of issue of shares of ICIL to theshareholdersofPSML. The share exchange ratiobased on the&valuationreportissuedbyAZRAssociates,Independent& AmitCharteredAccountantKumar Singh, Registered Valuersissued Ernst &which is confirmedby the fairness opinionreportYoungMerchantBankingServices LLP, a Category-IMerchantBanker is as follows:
		2 (Two) fully paid up equity shares of Rs. 2/- each of ICIL to theEquity Shareholders ofPSML as onRecord Date, forevery 15(Fifteen) fully paid up equity shares of Rs.10/- each held by them inPSML.
		ICIL is the Promoter Company of PSML holding1,43,41,280 equityshares of face value Rs. 10/- each representing 74.53% of paid upshare capital of PSML.The said shares held bylClL in PSMLwill standcancelled pursuant to this scheme on account of amalgamationwithout any further application, act and deed.
6.	Briefdetailsofchangeinshareholdingpattern (if any) oflisted entity	Pursuant to issue and allotment of shares of ICIL to the Shareholdersof PSML, the Promoter/Promoter Group shareholdingin ICIL willreduce from 58.94% to 58.75%. The public shareholding of ICIL willincrease from 41.06% to 41.25%.