The stock of Wipro Ltd plummeted 12.3 per cent on Tuesday, after the IT major de-merged its non-IT business into an unlisted entity. The non IT-businesses – consumer care and lighting, medical equipment and infrastructure engineering – have been transferred to Wipro Enterprises, which will not be listed.

Wipro crashed 12.3 per cent to Rs 393.60 on the NSE. According to analysts, the sharp fall in the share price is the adjustment for the new stock to be issued to the existing shareholders.

Wipro shares traded without the benefit of entitlement of new shares in Wipro Enterprises, as the company has set April 11 as the record date for the scheme of arrangement. It takes two trading days for a purchase to be reflected in a shareholder’s account.

The demerger move will help Wipro to meet SEBI’s minimum public shareholding norm of 25 per cent by June. Wipro’s promoter held 78.29 per cent in the company as on December 31, 2012.

Public shareholders in Wipro are entitled to receive one share in Wipro Enterprises for every five shares they hold in Wipro. They can also choose to receive a 7-per cent preference share (redeemable after 12 months, at a price of Rs 235.2) in WEL for every five shares in Wipro.

The third option is to convert their WEL shares into Wipro shares – by receiving one share in Wipro for every 1.65 shares in WEL. Shareholders of Wipro on December 28 had approved the demerger and the process is expected to be completed in 4-5 months.

(This article was published on April 9, 2013)
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