Welspun India to demerge divisions

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Welspun India Ltd (WIL), part of the USD 3 billion Welspun Group, today announced a de-merger of its distribution and marketing and investment divisions into two separate companies at cost basis. As part of the restructuring, Welspun Global Brands Ltd (WGBL), the distribution and marketing company will hold the entire equity of Welspun Retail Limited (WRL).

As per the de-merger, WGBL will hold all the international businesses along with WRL. The investment company of WIL will be known as Welspun Investments Ltd (WINV).

Established in 2003, WRL is the youngest member of Welspun Group, with brands catering to the high end as well as the value for money segment. The company retails its products through two brands: ‘Spaces Home & Beyond’ and ‘Welhome’. Currently WRL has its presence in India through 215 Stores in 95 cities.

As part of this de-merger, WGBL will issue fresh shares to promoters and shareholders of WIL in lieu of promoters’ and WIL’s shareholding in WRL (which is valued at cost basis) and thus WGBL will hold entire equity of WRL.

Subject to necessary approvals, the effective date for the demerger is proposed to be 1st April 2009. Upon de-merger, both WGBL and WINV will automatically be listed separately on Indian stock exchanges i.e NSE and BSE.

The demerger will allow strategic focus on specific tiers of the businesses and thus shall enable better business control, flexibility on business operations and leveraging of the considerable international focus of the group, said a statement from the company.

The current shareholders of WIL will be allotted new shares in WGBL and WINV i.e. – shareholders of every 100 shares in WIL will be given 10 shares of WGBL and 5 shares of WINV. Post demerger, promoter and non-promoter shareholding in WGBL shall be 57.6 per cent and 42.4 per cent respectively.

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