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The RP-Sanjiv Goenka Group flagship, CESC Ltd demerged its businesses into four different companies — power generation, electricity distribution, retail (Spencer’s Retail) and other ventures. The new entities are to be listed by October 1.
The Kolkata-headquartered CESC reported a consolidated turnover of ₹14,202 crore and a net profit of ₹810 crore in FY17. Post announcement of the restructuring, CESC shares tanked 15.10 per cent to close at ₹829.80 crore on Thursday at the BSE.
“It is a mirror image demerger, meaning shareholders of CESC will get proportionate shares in all four companies,” Sanjiv Goenka, Group Chairman, said. Currently, CESC has a promoter holding of 49.92 per cent and the rest is held by public.
After the restructuring, CESC shareholders having 10 shares (of ₹10 face value each) will get 18 fully paid shares in the four companies. This includes five shares (of ₹10 face value) each in distribution and generation companies; six shares (of ₹5 face value) in Spencer’s Retail and 2 shares (of ₹10 face value) in other ventures.
Goenka said CESC will handle the electricity distribution business of the group. The group currently caters to 35 lakh electricity consumers in Kolkata, Kota, Bikaner, Bharatpur and Noida. The 2,550 MW of power generation capacity will be demerged into a separate entity.
IT arm Firstsource will be bundled in under the “New Venture” entity along with FMCG and sports.
Elaborating the rationale behind demerger, Goenka said CESC was originally an electricity utility for Kolkata and Howrah.
“However, over a period of time it has grown into a diversified conglomerate. The demerger is to re-orient and re-organise itself to have greater focus on each of its businesses,” he added.
Growth potential Goenka said Spencer’s Retail is company level EBIDTA positive for the last eight months in a row. Around 2-3 lakh sq ft of space will be added over the next 2-3 years.
“Our apparel brand 2Bme has done well with approximate monthly sales of ₹8 crore,” Goenka said.
Growth in the FMCG segment will come from increase in product portfolio and acquisitions in the foods and healthy snacking category.
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