RP-Sanjiv Goenka Group flagship CESC rejig: Shareholders’ nod needed as specified by NCLT

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Kolkata | Published: November 1, 2017 6:10:22 PM

Nine unlisted subsidiaries of CESC Ltd are CESC Infrastructure, Spencer's Retail, Music World Retail, Spen Liq Private Ltd, New Rising Promoters, Haldia Energy, RP-SG Retail, RP-SG Business Process Services and Crescent Power Ltd.

The proposed corporate restructuring of CESC Ltd, the flagship of RP-Sanjiv Goenka Group, by way of a demerger scheme of its multiple businesses needs shareholders’ approval as specified by the Kolkata bench of National Company Law Tribunal (NCLT). (IE photo)

The proposed corporate restructuring of CESC Ltd, the flagship of RP-Sanjiv Goenka Group, by way of a demerger scheme of its multiple businesses needs shareholders’ approval as specified by the Kolkata bench of National Company Law Tribunal (NCLT). Accordingly, a meet of the company’s shareholders has been convened in Kolkata on December 15 for the approval of the proposed scheme.

Passing an order, a division bench of the NCLT, comprising Justices Vijai Pratap Singh and Jinan KR, has said the equity shareholders of the applicant CESC Limited shall be given the option of voting on the resolution for approval of the scheme by casting their votes personally or by proxy at the venue of the meeting on December 15 or by postal ballot/remote e-voting during the period from November 15 to December 14.

The cut-off date in terms of the rules for determining the eligibility of shareholders to vote is scheduled on November 8.

“The resolution for approval of the scheme of arrangement, if passed by a majority in number representing three-fourths in value of equity shareholders casting their votes, as aforesaid, shall be deemed to have been duly passed on the date of the said meeting of such shareholders under Section 230(1) read with Section 232(1) of the Companies Act, 2013,” the tribunal stated in its order on October 26.

In a stock exchange filing on Tuesday evening, CESC Ltd said pursuant to the order of the Kolkata bench of the NCLT on October 26, a meeting of the shareholders shall be held for the purpose of considering and, if thought fit, approving, with or without modification a “Composite Scheme of Arrangement” amongst CESC Ltd, nine of its unlisted subsidiaries and their respective shareholders.

Nine unlisted subsidiaries of CESC Ltd are CESC Infrastructure, Spencer’s Retail, Music World Retail, Spen Liq Private Ltd, New Rising Promoters, Haldia Energy, RP-SG Retail, RP-SG Business Process Services and Crescent Power Ltd.

The board of directors of the Group’s flagship company had approved the proposed business restructuring scheme in its meeting in May this year. The Scheme provides for demerger of existing businesses of the company. This will lead to four entities, focusing on generation (CESC Genco), distribution (CESC), organized retail (Spencer`s Retail) and other ventures (CESC Ventures).

The company was awaiting regulatory approval from the NCLT, among others. The appointed date of demerger was October 1 subject to approval of the tribunal.

According to the Group, the proposed restructuring scheme aims to simplify the present corporate structure. “The objective is to focus on the individual businesses to enhance efficiencies, accelerate growth, facilitate access to capital and, most importantly, unlock shareholders’ value,” it has said in an investors presentation.

After the necessary regulatory approvals, CESC and the three resultant entities will be listed on the stock exchanges. Post restructuring, a CESC shareholder against every 10 shares will have 18 fully paid shares in the resultant four companies – 5 shares each in the distribution and generation companies, 6 shares in the retail company and 2 shares in the company for other ventures.

In FY17, CESC Ltd had reported a marginal 2.1% year-on-year rise in its net profit to Rs. 862.86 crore from Rs. 845.13 crore in the previous fiscal. Revenue from operations of the company grew 6.4% y-o-y at Rs. 7366.63 crore during the last financial year.

“Faster GDP growth, good governance, continuation of policy reforms and benefits of the Goods and Services Tax (GST), coupled with the positive effects of your company’s demerger, ought to result in even better results in 2017-18. I certainly believe that to be the case,” chairman Sanjiv Goenka said in the company’s latest Annual Report. On Wednesday, the company’s scrip fell 0.18% to end the day at Rs. 1016.35 on BSE.

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