Mumbai: In a reverse merger, Henkel SPIC India Limited (HSIL) the subsidiary of German detergent leader, Henkel, will merge with Henkel India Limited (HIL) at a stock swap ratio of 1:1, determined by Ernst & Young's valuation.

HIL and HSIL will file their applications for merger in the Madras High Court as per required statutorily, after the t board of Henkel India formally approves the merger proposal

HIL, formerly the Calcutta Chemical Company Ltd was acquired by A C Muthiah's HSIL, which holds a 92 per cent stake, in 1999. The merger is proposed to be effective from July 1, 2004. Henkel SPIC will dip into reserves to write off the deferred revenue expenditure of Rs249 crore and the accumulated loss of Rs55 crore.

Addressing a press conference in Chennai, Muthiah, chairman, Henkel SPIC, claimed that the merger would harness the synergies of both companies lead to cost optimisation and reduce the overheads of both companies.

The shareholding pattern of Henkel India will remain unchanged after the merger, with the parent, Germany's Henkel KgaA will continue to hold 51 per cent stake in the merged entity, Tamil Nadu PetroProducts Ltd (TPL) will have 16.9 per cent. IFC will hold 7 per cent. The balance will remain with the public.

Under the new structure, all manufacturing units will be grouped under Henkel India while the marketing will be consolidated under Henkel Marketing India Ltd. The brands Henko Range, Mr White, Margo, Neem Toothpaste, FA range, Chek and Brisk range produced by these companies will come under the Henkel India umbrella.