EMS Ltd to Acquire 75% Stake in Brijbihari Pulp and Paper Pvt Ltd

EMS Ltd has announced a significant development in its strategic expansion plans. In a recent stock exchange filing, the company revealed that its board of directors has approved the acquisition of a 75% stake in M/s Brijbihari Pulp and Paper Private Limited. This acquisition involves the purchase of 7,500 equity shares of the target company. The transaction will be managed by EMS Ltd’s Takeover & Management Committee, which will oversee the process and provide a report within 30 days.

M/s Brijbihari Pulp and Paper Private Limited, incorporated on January 10, 2023, is headquartered in Uttar Pradesh. The company specialises in manufacturing Flex Sheets. However, it is anticipated that this manufacturing activity will cease by December 31, 2024. The acquisition aligns with EMS Ltd’s strategy to integrate the target company into its operations, eventually making it a subsidiary.

The transaction is expected to be conducted on an arm’s length basis, ensuring that all terms and conditions are fair and transparent. According to the Companies Act, 2013, the acquisition is classified as a Related Party Transaction, as certain directors and members of EMS Ltd might have interests in the target company. However, the transaction is structured to comply with regulatory requirements and to avoid any conflicts of interest.

The primary objective of this acquisition is to utilize the target company’s assets for securing fund and non-fund credit facilities for EMS Ltd. Notably, the target company had acquired its property through the National Company Law Tribunal (NCLT) process, which will be mortgaged to facilitate these financial arrangements.

EMS plans to make an initial payment of ₹5.00 crores to ₹7.50 crores as a token amount, with the balance to be settled within 90 days, contingent upon the completion of all formalities. If the acquisition does not proceed for any reason, the target company is obligated to refund the token amount without any deductions.

Additionally, upon successful completion of the acquisition, the registered office of the target company will be relocated from its current address in Ghaziabad to a new location at C-88, RDC, Raj Nagar, Ghaziabad. This move is part of the broader strategy to streamline operations and integrate the target company effectively into EMS Ltd’s corporate structure.

In the same filing, the company also reported its financial performance for the quarter ended June 30, 2024. The company reported a significant increase of 63.12% in consolidated net profit after tax, to ₹37.16 crore for the first quarter ended June 30, 2024, compared to ₹22.78 crore in the same period last year. Revenue from operations grew by 49.51% to ₹206.28 crore during the quarter, vis-a-vis ₹137.97 crore in the same period last year.

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