RP-Sanjiv Goenka flagship company CESC announces demerger

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RP-Sanjiv Goenka flagship company CESC will be demerged into three entities, it announced on Friday. Power and retail will be separate companies while IT, FMCG and Quest Mall will be brought under another company.

Generation and distribution business would continue to be called CESC, while retail business would now be called New Retail. The third company which would include IT, FMCG etc will be named Venture Companies, CESC said in a statement on Friday.

Other power business like Haldia Energy and Dhariwal Infrastructure, its solar, hydel and power distribution businesses in other states would continue to remain as subsidiaries of CESC.

“The move will help bring in focused investment. It will also result in benefits for all shareholders and will allow unlocking value for the investors, give a focused management attention to each of the verticals to pursue respective growth plans and allow the new entities to take advantage of the market values of Retail, FMCG and IT business,” said Sanjiv Goenka, chairman RP-Sanjiv Goenka group.

Each existing shareholder of CESC, for each 10 of his/her holding, will be allotted additional 6 shares of Rs 5 each in the retail company — New Retail and additional 2 shares of Rs 10 each in the Venture companies. Paid up equity share capital of the New Retail and Venture Companies would be Rs 40 crore and Rs 26 crore respectively, over and above the equity share capital of CESC of Rs 132 crore.

Record date for this purpose would be October 31, 2018 and listing of New Retail and Venture companies would take place subsequently.

CESC has already received NCLT’s order for four-way demerger. However, at present it divided the company into three as it needs state power regulator’s approval for separating its power distribution and generation business.

As part of the plan 5 lakh fully paid up preference shares of Rs 100 each of RP-SG Retail Ltd shall be issued and allotted to the CESC.

Source: Economic Times