PRESS TRUST OF INDIA

KOLKATA, Dec. 22. - The merger plan of ITC Bhadrachalam Paperboards Ltd with its parent company, ITC Limited, has been overwhelmingly approved by shareholders at a court convened extraordinary general meeting.

At least 98 per cent of the ITC Bhadrachalam shareholders gave the merger plan the green signal at the Andhra Pradesh High Court convened EGM in Secunderabad on 14 December, according to a statement issued by the ITC Limited here today.

The meeting held under the chairmanship of Mr. Justice S Dasaratharama Reddi (retd), recorded more than 6,90 crore votes in favour of the merger resolution and only a little over 16 lakh against. The merger has already been approved by ITC shareholders at a court-conducted EGM here on 7 December. Earlier, the chairman of the Kolkata-based tobacco major, Mr YC Deveshwar, while placing the merger resolution before ITC shareholders had strongly justified the move arguing that it would immensely benefit both companies.

The merger is being viewed as a strategic move to create synergy between Bhadrachalam's paperboard business with that of ITC's, which is fast moving into non-tobacco areas. Mr. Deveshwar had argued that the merger would increase EPS of ITC and at the same time the parent company would get loss benefit that ITC Bhadrachalam had incurred in the past.

Significantly, Mr Deveshwar had earlier expressed "grave concern" at the declining volume of cigarettes sales in India over the past couple of years and had declared that the merger of Bhadrachalam was aimed at making it globally competitive with the help of "ITC's money and infrastructure facilities."

Incidentally, ITC Bhadrachalam is already under special attention of Virginia House when the merger plan was announced earlier this year and the company is on course to a remarkable turnaround after the infusion of Rs150 crore by the parent company a couple of years ago. At the last ITC AGM, Mr Deveshwar had announced an ambitious Rs 1500 crore investment plan in the paperboard business over the next five to seven years to achieve leadership position in the Afro-Asian region.