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| Celebrity Fashions gets court nod |
| BS Reporter / Chennai Sep 06, 2010, 00:11 IST |
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To demerge Indian Terrain Fashions
Celebrity Fashions Ltd (CFL) has secured the sanction of Madras High Court for the scheme of arrangement between itself and Indian Terrain Fashions Ltd for the demerger of Indian Terrain division into a separate entity, to be called Indian Terrain Fashions Limited.
The court has sanctioned the scheme in toto except the Part III which relates to the slump sale of the bottoms division to Celebrity Clothing Limited. The orders are expected to be passed in about two weeks' time, CFL said in a filing to the Bombay Stock Exchange.
The CFL board of directors has decided to retain the bottoms division with itself and not to give effect to the proposed slump sale of the same into Celebrity Clothing Limited as envisaged in the composite scheme of arrangement between Celebrity Fashions Limited, Celebrity Clothing Limited and Indian Terrain Fashions Limited.
“In the interest of all stakeholders, the bottoms division is not being transferred to Celebrity Clothing Limited considering that the company initiated the process of re-structuring during August 2009 and obtained the creditors' approval during June 2010 as against the plan of January 2010,” the company said in the announcement.
The objective behind the transfer was to attract strategic or financial investment but it did not materialise, the company said. In the absence of strategic investment, having exports division consisting of tops and bottoms divisions under the same company would result in administrative efficiencies and lesser regulatory compliance formalities, it added.
In the absence of strategic investment, having multiple entities in similar line of business will result in duplication of efforts and as a consequence increase the operating costs, the company said.
It pointed out that Celebrity Clothing Limited was a wholly-owned subsidiary of CFL and that the consideration for transfer was arrived at based on the net assets of the bottoms division. “Accordingly, the transfer or non-transfer would not have any major implications on the consolidated position of the company,” it said.
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