Orient Paper and Industries surged over 6 per cent on Thursday after the company informed bourses that its board of directors have decided to raise capital and demerge its consumer electric business into a wholly owned subsidiary. The scrip closed 6.63 per cent up at Rs 79.60. It has opened at Rs 75.50 and touched a high and low of Rs 84.30 and Rs 75.10, respectively. Sensex closed 40.66 points up at 28,412.89.
The company in a press release said, “The board has decided to raise capital through rights issue of equity shares of the company for an amount aggregating to Rs 50 crore at a ratio, price, record date and other matters to be fixed at a later date, subject to necessary approvals.”
It further added that the board has also given in-principle approval for the vertical demerger of its consumer electric dvision. “For the purpose of demerger, the board has appointed a committe of executives to formulate and recommend to the board at its next meeting a scheme of arrangement for the demerger in consultation with the merchant bankers and legal advisors,” the release said.
The company said the decision to demerge the electric division is to facilitate both paper and consumer electric division to focus on their core competencies and pursue their independent strategies. The panel for this purpose would work on various aspects of the scheme including consultations with various stakeholders such as statutory audiotrs, lenders, legal counsel, independent valuer,merchant banker etc .
For the year ended March 31, 2016, th company reported a total income of Rs 1,838 crore with profit before interest, dividend and tax of Rs 117 crore. The board has appointed HDFC Bank as financial advisor and Khaitan and company as legal counsel for the transactions.