Lion withdraws from India

Saturday, 28 May 2011 01:01 - - {{hitsCtrl.values.hits}}

Lion Brewery (Ceylon) Plc announced yesterday its decision to pull out from its Indian investment and joint venture with Carlsberg South Asia Pte Ltd.

The exit from the joint venture South Asian Breweries Pte Ltd. would be via the divestiture of Lion shareholding to Carlsberg at a consideration equivalent to the book value of the investment as at today (same as the book value as at 1 March 2011).

The company is currently awaiting the necessary regulatory approvals in order to conclude the transaction.

Lion Brewery has been a shareholder in SoAB since 2006. SoAB is the holding company of the operating entity, Carlsberg India Pvt Ltd., headquartered in Gurgaon, New Delhi. The Board of Lion Brewery has evaluated the very substantial investment programme required in India, which the Board estimates could be up to US$ 200 million over the next few years. The Board has also evaluated the significant investments that are required to be made in its Sri Lankan business over the short to medium term to capture opportunities and meet the emerging positive economic environment.

The Board is conscious of Sri Lanka being the company’s home market and as such, is of the view that maintaining its focus on the current market position is the topmost priority and one which would in turn; deliver the most financially beneficial position for the company and its shareholders.

With the sale of this investment, Lion Brewery will be free of debt thereby strengthening the company and positioning it strongly to invest in its future development and growth and face future challenges in the industry.

Since part of the investment in SoAB was funded out of a Rights Issue of Shares in September 2009, the Board will summon an extraordinary general meeting of the shareholders no sooner the proceeds are received on account of this transaction, in order to seek the approval of the shareholders for the utilisation of the funds raised through the Rights Issue.

India liberalises rules for overseas direct investment

Reuters) - The Reserve Bank of India (RBI) said on Friday Indian companies having wholly owned subsidiaries abroad or having at least 51 percent stake in an overseas joint venture are now allowed to write off capital or other receivables in respect of the joint venture or subsidiary.

The central bank said any such write-off or restructuring will have to be reported to the RBI within 30 days of the write-off.