Welspun Enterprises to merge three units with Welspun Projects
Welspun Enterprises plans to merge its units Welspun Infratech, Welspun Plastics and Welspun Infra Projects with Welspun Projects
Mumbai: The Welspun group is merging three units of its commodity trading arm with its engineering unit to simplify its corporate structure and leverage the strengths of a combined balance sheet. The new entity will have cash resources of approximately ₹ 800 crore as on 30 September.
Welspun Enterprises Ltd, whose key business is trading in commodities, said it plans to merge its units Welspun Infratech Ltd, Welspun Plastics Pvt. Ltd and Welspun Infra Projects Pvt. Ltd with Welspun Projects Ltd. Shareholders of Welspun Enterprises will get 12 shares of Welspun Projects for every share in Welspun Enterprises.
The consolidation will enable Welspun Enterprises, its subsidiaries and Welspun Projects 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 statement said.
“The merger is aimed to consolidate and simplify corporate structure of Welspun Enterprises and its subsidiaries. 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 cashflows," it said.
Welspun Enterprises holds about 61.12% stake in Welspun Projects through its 100% owned subsidiary—Welspun Infratech Ltd—and the same will be cancelled on the amalgamation.
The appointed date for the amalgamation would be 1 April.
KPMG is acting as tax and regulatory advisor for the entire transaction, while SBI Capital Markets Ltd has issued a fairness opinion on the swap ratio recommended by PriceWaterhouseCoopers which has conducted the valuation exercise.
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