have considered and accepted the recommendations of the Committee of Directors as well as the Audit Committee for the demerger of the 'Consumer Products Business' of the Demerged Company to the Resulting Company, subject to the requisite statutory and regulatory approvals, and approved the aforesaid Scheme pursuant to Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 read with the rules framed thereunder and SEBI Circular No. CFD/DIL3/CIR/2017/21 dated March 10, 2017, as amended from time to time.
The Scheme proposes to demerge the 'Consumer Products Business' from the Demerged Company to the Resulting Company. The Consumer Products Business of the Demerged Company has been identified as the sourcing, packaging, marketing, distribution and sales of (i) vacuum evaporated edible common salt ('Salt') for human consumption, (ii) spices, (iii) protein foods and (iv) certain other food and other products Under the Scheme, the salt manufacturing facility, basic chemistry products and specialty products business are not proposed to be transferred to the Resulting Company and will continue to be owned by the Demerged Company. Necessary salt supply arrangements shall be put into effect on and from the date on which the Scheme comes into effect.
The turnover of the demerged division is Rs1,847cr representing 16% of the total turnover of the Demerged Company on a consolidated basis.
With the view to integrate the consumer products business activities undertaken by both, the Demerged Company and the Resulting Company, under a single entity, it is proposed that the Consumer Products Business of the Demerged Company be demerged and transferred to the Resulting Company under the terms and conditions of the Scheme, the company said after the market hours today.
The proposed transaction will be in the best interest of the shareholders of the Resulting Company as well as of the Demerged Company and shall not in any manner be prejudicial to the interests of the concerned shareholders and creditors or the general public at large.
The Scheme results in revenue and cost synergies including from supply chain opportunities, operational improvements, logistics alignment leading to economies of scale, creation of efficiencies, optimization of overlapping infrastructure, capital and operational expenditure and leveraging distribution networks.
The Scheme enhances the financial profile with higher growth, margin expansion and increased cash flows that will provide further headroom for inorganic growth opportunities; India and abroad.
The Scheme enables the Resulting Company to expand its presence in the fast moving consumer goods categories in India and abroad.
The shareholders of the Demerged Company will continue to participate in the growth of a larger consumer-focused company i.e. Resulting Company while continuing to own shares in the Demerged Company which will remain focused on its basic chemistry and speciality products businesses
The shareholding pattern of the Demerged Company shall not undergo any change pursuant to the Scheme. The current paid-up issued share capital of the Resulting Company is Rs63.11cr comprising of 63,11,29,729 equity shares of Re1 each, the company added in the filing.