Welspun India Ltd. (WIL) of the $3.5 billion Welspun Group, announced that the merger of WGBL with the company has come into force effective from December 7, 2012.
The High Court of Gujarat, by its order dated November 26, 2012, has approved the scheme of merger in a three-step process. First, WGBL has merged with WIL which is issuing fresh equity shares to the shareholders of WGBL. WIL which has 89.01 million shares outstanding is issuing 10.47 million shares of Rs. 10 each fully paid-up, and thereby would have a total of 99.48 million shares outstanding.
Next, marketing business of WBGL has been hived off from WIL via slump sale to its subsidiary Welspun Retail Ltd. (WRL) for a consideration of redeemable preference shares equivalent to the book value of the assets transferred. Finally, Welspun Retail Ltd. is being renamed as Welspun Global Brands Ltd. to retain its marketing identity.
The whole process would bring the entire manufacturing and marketing business under a single company. In the challenging global business environment, this restructuring would enable the textiles business to provide superior products and services to customers and also provide an opportunity to grow the market share in a much more profitable manner. It would also help lower the administrative and other costs. With this scheme getting into effect the company is on a profitable growth trajectory.
During the first half of FY13 WIL and WGBL have performed well and have reported strong profitability, as presented below:
Mr. Rajesh Mandawewala, Managing Director, Welspun India Ltd., said: “This is a major milestone for the Textiles Business, as overall efficiencies shall provide a much stronger platform for a profitable growth ahead. After having factored all the one-time closure cost in FY2012, the company now has a much leaner business set-up in line with the customer requirement.
The efforts in this direction have already provided a much stronger performance in H1 FY2013. We now look forward to a strong growth backed by high quality innovative products and superior services to our customers. This focused approach shall deliver better returns to the stakeholders”.