Bangkok--1 Feb--Master Mind Communications
L.V. Technology Public Company Limited (LVT), a listed company specializing in engineering consultancy services with ongoing operations in various parts of the world, expects to reap handsome profits from just-concluded partial divestment of its subsidiary in India, which will significantly contribute to the company’s financial turnaround and further business expansion.
The partial sales of the company’s shares in LNVT, the Indian subsidiary, will yield proceeds of US$ 8.5 million, or roughly 260 million baht. Out of the this amount, about 157 million baht is expected to be booked as profits on a consolidated basis.
LVT founder and present Hans Jorgen Nielsen, who played a crucial role in the negotiations over the past ten months which culminated in the successful conclusion of the shares sale, said the new Chinese investors in LNVT are a major player in the global cement industry who will help grow LVT’s businesses in India and other countries around the world.
According to filing with the Stock Exchange of Thailand (SET) today, LVT and its Indian partner VC
Rao will reduce their shareholdings in LNVT from 49% and 51% respectively and each will retain 16% in the new LNVT corporate structure with an expanded capital base which gives the Chinese investors — Sinoma International Engineering Company Limited (SIE) — a controlling stake of 68%.
The transaction represents a massive capital gain for LVT since its original investment of 196,000 shares of 10 Indian Rupee each (roughly 6 baht) or 49% of LNVT in 2001. In the latest transaction, LVT sold 122,000 shares (or 30.5%) at US$ 69.93 (about 2,100 baht), which translates into an astronomical capital gain of about 350 times the original value.
Mr. Nielsen stated that alongside the share sales by LVT and its Indian partner, the new Chinese investors, SIE, will inject US$ 5 million into LNVT to support expansion of its businesses. “We expect that income from the reduced shareholding in LNVT will be at least similar to previously when we held 49%,” Mr. Nielsen stated.
Operating from the southern Indian city of Chennai, LNVT was established in 2001 as a joint venture between LVT and Indian businessman VC Rao with the prime objective of bringing the energy-saving ‘classifier’ developed by Mr. Nielsen into the Indian market. Because of the high energy costs in India, the modification became an instant success and the company quickly grew into a thriving provider of engineering services for the booming cement industry both in India and neighboring countries like Sri Lanka and Nepal.
Meanwhile, Sinoma is a publicly listed company based in Shanghai but controlled by the Chinese government. The entire group employs about 170,000 people and is among the biggest Chinese enterprises. The group commands the largest market share of cement-plant machinery in China while enjoys about 36% of this market outside China. Inside China itself, the group also operates a large cement production capacity about double the size of Thailand’s combined cement industry.
The latest transaction, which was endorsed by the LVT Board of Directors yesterday (Jan 31, 2013), is expected to help speed up ongoing process of financial turnaround and further business expansion for LVT.
The company swung around from handsome profits of 221.9 million baht and 144 million baht respectively in 2008 and 2009 into losses of 239 million baht and 23.8 million baht in 2010 and 2011 respectively. For the first nine months ending September 2012, LVT reported losses of 163.8 million baht.