In a move aimed at consolidating and simplifying the corporate structure of Welspun Enterprises Ltd. (WEL) and its subsidiaries, the boards of WEL and Welspun Projects (WPL), on Wednesday, decided to merge WEL, Welspun Infratech (WITL), Welspun Plastics Pvt. Ltd. (WPPL) and Welspun Infra Projects Pvt. Ltd. (WIPPL) with WPL.
As a result, a statement from Welspun said, all the companies will merge with WPL, a listed entity.
Shareholders of WEL will get 12 shares of WPL for every share held in WEL.
The appointed date of the scheme would be April 1. WEL holds about 61.12 per cent stake in WPL through its 100 per cent subsidiary, WITL, and the same shall stand cancelled on amalgamation.
Welspun said the consolidation will enable WEL, its subsidiaries and WPL to “better leverage their strengths and target opportunities, which need large free cash and strong balance sheet to put the resultant entity on an accelerated growth path.”
The combined entity will have cash resources of about Rs.800 crore.
“The elimination of multiple entities is expected to benefit in terms of superior capital structure, increased flexibility to allocate capital more efficiently, reduction in administrative / compliance cost and enhanced visibility of earnings and cash flows,” the statement said.
The scheme will be subject to requisite approvals of the stock exchanges and sanctions of the High Courts of Bombay and High Court of Gujarat.
It is expected to be completed in seven months.
