NCLT approves composite scheme of arrangement among 3 GMR companies

Our Bureau | | Updated on: Dec 23, 2021

Includes de-merger of non-airport business of GIL

The Mumbai Bench of the National Company law Tribunal (NCLT) has approved the Composite Scheme of Arrangement amongst GMR Power Infra Limited (GPIL), GMR Infrastructure Limited (GIL) and GMR Power and Urban Infra Limited (GPUIL) and their respective shareholders.

The Bench with Suchitra Kanuparthi as Member (Judicial) and Rajesh Sharma as Member (Technical) observed all the requisite statutory compliances have been fulfilled. Accordingly, it declared the petition filed by company as absolute. Thus, “the scheme is sanctioned with the appointed date fixed as April 1, 2022,” it said. Board of three petitioner companies approved the scheme on August 27, 2020.

GIL, directly and/or indirectly through subsidiaries and joint ventures, houses various infrastructure development and operations activities of the group across different verticals, that is, airports, EPC, energy, transportation and urban infrastructure. The airport business has a distinct operating model from that of the urban infrastructure business and the EPC business of GIL, and each of these provide a strong growth opportunity in the foreseeable future. These businesses have, since their inception, attained a significant size and scale in their respective segments.

As these businesses approach their next phase of growth, it would be strategically apt to segregate the urban infrastructure business and EPC business from the airport business, to enable them to move forward independently, with greater focus and specialisation, building further on their respective capabilities and their strong brand presence.

The scheme would benefit the businesses on account of the potential synergies and incremental operational efficiencies from combining the similar and related businesses under GIL (in case of the airport business) and under GPUIL (in case of urban infrastructure business and EPC business) respectively, enabling these businesses to create further value and allowing investors to allocate their portfolio into separate entities, focused on the distinct business of airport (under GIL) and urban infrastructure and EPC (under GPUIL), which aims to unlock shareholder value.

The reorganisation would lead to a simplified organisation structure assisting shareholders and investors to better understand and evaluate both businesses independently as investment options and potentially lead to a higher value illumination of each of these businesses including by way of attracting long term sectoral / thematic and marquee investors and sovereign wealth funds particularly in the airports, energy and transportation sectors.

Given that the infrastructure business has attained significant maturity, the scheme will enable GIL and its shareholders to achieve its ultimate objective of segregation of the airport business from the remaining businesses and to achieve clear bifurcation of these businesses for unlocking the value of each vertical and pave way for focused growth with a view to create significant stakeholder value. It is expected that the combined airport business resulting out of such restructuring will have better prospects of growth and will enable management to vigorously pursue a focused growth strategy.

The Bench said: “Petitioner Company 1 (GPIL) to be dissolved without winding up.”

Published on December 23, 2021
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