The Board of Directors of Ramco Industries Limited have recommended to de-merge Ramco
Systems as a separate entity and transfer the company's fast growing software business
into a new company, named, Ramco Systems Limited.
The de-merger will be effective, subject to the approval of the members of both the
companies and also of the High Court of Madras. The de-merger is done as per the
provisions of the Income Tax Act, recently introduced in the Finance Act, 1999, which is
tax neutral to both the companies and shareholders.
The shareholders of Ramco Industires Limited will receive shares in Ramco Systems Limited
in the ratio of 1:1, ie, for every one share held in Ramco Industries Limited, they will
be allotted one share in Ramco Systems Limtied.
Simultaneously, the Board of Ramco Industries Limited has also approved the transfer of
its investments in the overseas software subsidiaries in the US, Switzerland, Malaysia and
Singapore, which market the ERP software and services abroad, for the consideration in the
form of allotment of shares by Ramco Systems Limited to Ramco Industries Limited. Ramco
Systems Limited has already allocated about 16% of its post-equity for allotment to
employees.
Both the companies will be filing the de-merger scheme with the High Court of Madras
shortly. The shareholders' meeting for the approval of the de-merger scheme will be called
at the direction of the Madras High Court. The Company will apply to the stock exchange
for automatic listing, after receiving the final appro-val from the High Court of Madras.
In recognizing the future trend of general software development as well as the Enterprise
Application market, Ramco has already invested more than 150 man-years of effort on a new,
high produc-tive and flexible Technology Framework for web based business software
development. Further versions of Ramco applications would be on this new software
framework, which would substantially reduce the life cycle cost of software from
develo-pment to customer usage besides enhancing the life of the so-ftware per se. Ramco
may also plan to encourage software developers and system integrators to use this software
development framework in solving specific customer problems.
Ramco Systems to de-merge as a separate entity
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