Shankara Building Products Announces Demerger with Shankara Buildpro

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26 Aug, 2025 12:21

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Shankara Building Products Limited has announced a scheme of arrangement with Shankara Buildpro Limited, sanctioned by the National Company Law Tribunal, Bengaluru Bench, on August 21, 2025. The scheme involves the demerger, transfer, and vesting of the undertaking engaged in the Trading Business from Shankara Building Products into Shankara Buildpro Limited.

Under the scheme, Shankara Buildpro Limited (SBL) will issue and allot 1 fully paid-up equity share with a face value of ₹10 each for every 1 fully paid-up equity share of ₹10 each of Shankara Building Products Limited (SBPL) to the shareholders of SBPL recorded in the register as on the Record Date (September 24, 2025).

For determining the cost of acquisition of equity shares of Shankara Building Products and SBL (post demerger), shareholders are advised to apportion their pre-demerger cost of acquisition of equity shares in the Company as follows:

Example:

A shareholder holds 50 shares (face value of ₹10 each) in SBPL before the Record Date i.e., September 24, 2025 at a price of ₹1,000 per share. The total cost of acquisition of 50 shares is ₹50,000. Pursuant to the Scheme, such shareholder will be allotted 50 fully paid-up equity shares (face value of ₹10 each) of SBL for 50 shares held in SBPL.

The proportionate cost of acquisition of 50 shares of SBL will be ₹32,902.70 (65.81% of ₹50,000) and that of 50 shares of SBPL will be ₹17,097.30 (34.19% of ₹50,000).

According to Section 47(vid) of the Income Tax Act, 1961, the issue of shares of SBL to the equity shareholders of SBPL pursuant to the Scheme is not a transfer and hence not taxable for the equity shareholders.

For the equity shares issued by SBL, the date of acquisition of such equity shares, for capital gains purposes, will be the date of acquisition of the original shares of SBPL for each shareholder, as per Explanation 1(i)(g) to section 2 (42A) of the Income Tax Act, 1961.