Orient Paper down 80% on demerger of cement business

Moneycontrol Bureau

Orient Paper and Industries plunged more than 80 percent on Thursday due to demerger of cement business.

The company fixed March 9, 2013 as record date for deciding the shareholders eligibility for allotment of equity shares pursuant to the scheme.

Today is the ex-date. So accordingly the stock adjusted and reflected the value of paper & consumer durable business (P&C).

According to the scheme of arrangement, the company completed the process of demerger of the cement undertaking of Orient Paper and Industries into Orient Cement with effect from February 26, 2013.

"The scheme provides that in consideration of the demerger of the cement undertaking and transfer and vesting thereof with the Orient Cement Limited, for every 1 equity share of face value of Re 1 held in the company, as on the record date, every equity shareholder of the company shall without any application, act or deed, be entitled to receive 1 equity share of face value of Re 1 each of Orient Cement, credited as fully paid-up," the company said.

According to Emkay Global Financial Services, the de-merger creates a pure play cement company and ensures that the cement cash flows will be dedicatedly used for funding the growth of the business rather than supporting the losses of the paper division.

Also Read - Hold Orient Paper advises Emkay 

Production of cement division stood at 3,15,997 MT in January while domestic sale of cement at 3,17,065 MT.
 
At 11:34 hours IST, shares slipped 80.30 percent to Rs 14.30 on Bombay Stock Exchange.
 
There were pending sell orders of 491,135 shares, with no buyers available.