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Business News/ Companies / News/  Sterlite Power gets shareholders, creditors’ nod for demerger of transmission business
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Sterlite Power gets shareholders, creditors’ nod for demerger of transmission business

After the demerger, SPTL would only retain its manufacturing business.

The vote on STPL's demerger proposal received 100% approval from secured creditors, 99.26% approval from unsecured creditors, 99.99% from equity shareholders present and voting, and 100% by the non-fund-based lenders. (Mint )Premium
The vote on STPL's demerger proposal received 100% approval from secured creditors, 99.26% approval from unsecured creditors, 99.99% from equity shareholders present and voting, and 100% by the non-fund-based lenders. (Mint )

New Delhi: Sterlite Power Transmission Ltd (SPTL), has received the approval of its shareholders and creditors for the demerger of its transmission business from the company.

In November last year, the company had announced the demerger of its transmission business into a separate entity. Post the demerger, SPTL would only retain its manufacturing business.

“The vote on the demerger proposal received 100% approval from secured creditors, 99.26% approval from unsecured creditors, 99.99% from equity shareholders present and voting, and 100% by the non-fund-based lenders," said a company statement.

Empowering move

“The proposed demerger will empower both its businesses—the demerged transmission infrastructure (to be housed under Sterlite Grid 5 Limited) and global products & specialized EPC services (that will continue to remain under SPTL)—to pursue independent growth strategies with greater agility and focus," it added.

Also read |  Sterlite Power Transmission may consider listing post demerger: MD

According to the company, the new structure will allow each entity to attract capital pool tailored to its requirements. The infrastructure business can target long-term, patient investors seeking predictable cash flow, while SPTL, focusing on the Global Products & Services (GPS) business, can attract capital-seeking higher returns typically suited for pre-IPO or capital market investors, it said.

Validating rationale

Pratik Agarwal, Managing Director, SPTL, said, “This support from our stakeholders validates the strategic rationale behind the demerger. It is a significant milestone in our journey to create two future-ready businesses with distinct growth trajectories."

The proposed new company—Sterlite Grid 5—is well-positioned to capitalize on substantial growth in the transmission infrastructure business, according to the statement.

Also read |  Sterlite Power, Singapore's GIC join hands for power transmission platform

The Vedanta group company's manufacturing arm, Global Products & Services, produces power transmission components, including conductors, power cables, and overhead wire cables.

In an interview with Mint in March Agarwal had said post the demerger, SPTL may explore a public listing as part of its fundraising plans.

The company statement said the demerger will be implemented through a National Company Law Tribunal (NCLT) scheme. Upon completion of the demerger process, all SPTL shareholders will hold identical shareholdings in both companies.

The company has a portfolio of 33 completed, sold and under-construction power transmission projects covering approximately 16,529 circuit kms of transmission lines across India and Brazil. In India, Sterlite Power has about $2 billion worth of projects under management.

Also read |  Sterlite Power clinches second Rajasthan green energy transmission project

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ABOUT THE AUTHOR
Rituraj Baruah
Rituraj Baruah is a special correspondent covering energy, housing, urban affairs, heavy industries and small businesses at Mint. He has reported on diverse sectors over the last eight years including, commodities and stocks market, insolvency and real estate; with previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.
Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
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Published: 23 May 2024, 08:48 PM IST
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