CESC restructures business into four companies to unlock value

RP Sanjiv Goenka Group today announced restructuring of its flagship company Cesc Ltd by splitting it into four companies.

BPO, sports, FMCG and real estate will be bought under under the yet to be named entity. Group Chairman Sanjiv Goenka said CESC is being split into four companies by way of "mirror image" demerger for value unlocking and focused management into each of the verticals. However, these names can be changed at a later date.

Shareholders holding 10 shares of CESC Ltd will get five shares of Rs 10 each in generation and distribution, two shares in other ventures entity and six shares in Spencer's (face value of Rs 5 each).

CESC's shares were trading at Rs976.00 each on BSE at 12.40 am on Thursday, down 0.14% from its previous close, in a weak market while the market benchmark Sensex was trading down 0.38% at 30,541.83 points.

Elaborating the rationale behind demerger, Goenka said CESC was originally an electricity utility for Kolkata and Howrah.

Speaking about the existing debt distribution among four companies, Goenka said CESC Ltd's debts are very low.

CESC Generation will be managing total generation of 2550 MW including thermal and renewables.

Goenka said resultant share capital for each of the company will be Rs 66 crore for generation and distribution company, Rs 40 crore for Spencer's Retail, and Rs 26 crore for CESC Ventures.

Goneka said Spencer's will expand aggresively in Uttar Pradesh, West Bengal and Andra Pradesh by adding two lakh-three lakh square feet every year for the next few years. The group forayed into FMCG recently with snacks.

CESC's turnover during the fourth quarter of fiscal 2017 rose to ₹1,631 crore against ₹1,504 crore a year ago, while profits increased marginally to ₹295 crore from ₹293 crore.