Magma Fincorp Limited (“Magma”) is a non-deposit taking non-banking finance company (NBFC), registered with the Reserve Bank of India (RBI) as an Asset Finance Company. The Company, having started operations over two decades back, currently having a market cap of Rs. 3,600 crores (approx.) and is listed on the Bombay Stock Exchange Limited and the National Stock Exchange in India.

Magma ITL Finance Limited (MITL) is a unlisted public company and a wholly owned subsidiary of Magma carries out the business of tractor financing. The Company is registered with the Reserve Bank of India as non-deposit taking Non- Banking Financial Company under section 45-IA of the Reserve Bank of India Act, 1934.

Transaction Overview

  • Amalgamation of MITL with Magma Fincorp with an appointed date of 1st October 2017.
  • MITL being wholly owned subsidiary of Magma, no new shares will be issued in course of merger.

Share capital

Table 1: Share capital as on appointed date (All Figs. in Rs. Lacs)

Particulars MITL Magma
Issued, Subscribed and Paid-up Equity Capital 4,500 4,739.47
FV/ Share (in Rs.) 10.00 2.00
% Holding
Promoter Group 100% 27.75%
Public 72.25%
Total 100% 100.00%
  • Magma Fincorp increased stake in Magma ITL from 74% to 100% as on 23rd August 2017
  • Out of total public shareholding, holding by foreign portfolio investors is 58%.
  • Post amalgamation there will not be any change in Shareholding of Magma.
  • Authorised share capital of MITL will be merged with Magma and paid-up capital will be cancelled.

Accounting Treatment

  • All assets and liabilities will be recorded at book value by the Magma.
  • Inter-company balances, if any, shall stand cancelled.
  • The carrying amount of “Investments” in the books of the Magma in respect of its holding in the MITL, shall stand cancelled.
  • The difference in the value of Net Assets Transferred” and the carrying amount of Investments shall be adjusted in the reserves in accordance with the Accounting Standards or Generally Accepted Accounting Principles.

Approval from RBI

  • Prior written approval of Reserve Bank of India will be required by the MITL.
  • Magma (transferee company) is not required to take approval of Reserve Bank of India as there is no proposal for change in the shareholding pattern or paid up equity capital of the Transferee Company (as per disclosure in the scheme)

Financials:

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