CESC set to be divided into 3 companies

Current-News

Kolkata: Sanjiv Goenka-led CESC will split into three entities, with the power and retail businesses getting separate identities, while IT, FMCG and Quest Mall would be under the third unit.

“The move will help bring in focused investment,” said Sanjiv Goenka, chairman of RP-Sanjiv Goenka group.

“It will also result in benefits for all shareholders and will allow unlocking value for the investors, give a focused management attention to each of the verticals to pursue respective growth plans and allow the new entities to take advantage of the market values of retail, FMCG and IT business.”

The company’s shares rose 6.3% to Rs 899.7 on the Bombay Stock Exchange before the announcement, which was made after market hours on Friday.

The generation and distribution business would continue to be called CESC, while retail business would now be called New Retail. The third company, which would include IT, FMCG etc will be named Venture Companies, CESC said in a statement. Other power business like Haldia Energy Ltd and Dhariwal Infrastructure, its solar, hydel and power distribution businesses in other states, would continue to remain as subsidiaries of CESC. Plans also include splitting distribution and generation of CESC at a later stage.

“We have applied for West Bengal power regulator’s permission for de-merging and signing of power purchase agreement between the two.

It will be done as and when we receive the green signal,” said Goenka.

After the split, CESC will be a Rs 8,000 crore company, while the retail group would be around Rs 2,500 crore. The third company, which would include IT, FMCG and Quest Mall, is expected to be worth around Rs 5,000 crore.

“Each existing shareholder of CESC, for every 10 of his holding, will be allotted additional six shares of Rs 5 each in New Retail and additional two shares of Rs 10 each in the Venture company.

Paid up equity share capital of New Retail and Venture Companies would be Rs 40 crore and Rs 26 crore respectively, over and above the equity share capital of CESC of Rs 132 crore,” the company said.