Graphite electrode manufacturer HEG Limited has approved the demerger of its graphite business into a new company, and decided to merge Bhilwara Energy into HEG Limited, the company said in an exchange notification on May 22.
The step in intended to unlock shareholders’ value, HEG said. The existing company will be turned into a platform for green energy businesses, hydro and wind energy, advanced carbon business and other opportunities in the new age businesses.
The demerger will result in a share swap ratio of 1:1, while for the merger, the company said, "8 (Eight) fully paid-up equity share of INR 10 (Indian Rupees Ten only) each of the Transferee Company, for every 35 (Thirty Five) equity share of INR 10 (Indian Rupees Ten only) each of the Transferor Company."
HEG said the segregation of businesses with varying risk profiles offers shareholders greater flexibility to align risk preferences and de-risk the graphite business.
Ravi Jhunjhunwala, Chairman and Managing Director, CEO, HEG Limited, said, “The existing company and the New Company will script new paths as two independent, publicly listed companies. The underlying growth drivers, risk profile and capital allocation requirements are fundamentally different in the Graphite business compared to the green energy business.”
"This step will create a more agile and competitive entity which can tap opportunities in the clean energy space. Shareholders will have shares of 2 publicly listed companies, each with a sharper strategic focus and enhanced investment profile," Riju Jhunjhunwala, Vice-Chairman, HEG Limited said.
HEG has one of the largest integrated Graphite Electrode plants in the world, and exports over 70% of its production to more than 30 countries of the world.
HEG has a market capitalization of over Rs 10,000 crore. The shares have delivered a 40 percent return so far this year and more than doubled in last one year.
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