CESC to spilt into four Cos, stock tumbles 15%

Xavier Trudeau
Mai 19, 2017

Thumbs down: Shares of CESC tanked over 15 per cent to Rs 829 on BSE after the RP Sanjiv Goenka Group announced restructuring of its flagship company CESC by splitting it into four entities.

According to the plan, cleared by the CESC board, there will be four companies - focussing on generation, distribution, organised retail and other ventures.

All these four entities will be listed and the effective date will be October 1.

The business restructuring scheme aims to simplify the present corporate structure, he added.

After the demerger exercise, CESC will be left with the real estate assets as well as the substantial assets that it has in its BPO business.

Group chairman Sanjiv Goenka has said several times that going forward, CESC will be focusing on expanding its distribution business.

"This is a mirror image demerger. It means Rs 66 crore worth of additional shares will be issued to the shareholders", he said. "They will get same proportion of shares in each of the four companies", Goenka said, adding that there will be no holding company.

Shareholders holding 10 shares of CESC Ltd will get five shares of Rs 10 each in generation and distribution, two shares in other ventures entity and six shares in Spencer's (face value of Rs 5 each).

The separation of Spencer's will eventually lead to capital-raising to pay down its debts, Anuj Upadhyay, an analyst at broking firm Emkay Global Financial Services Ltd had said last week. The utility has been in the power generation and distribution business since 1899. The lender had posted a net loss of Rs 1,735 crore in the corresponding quarter a year ago. Spencer's retail is also expected to demerge into a separate listed company.

This is published unedited from the IANS feed.

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