In a stock exchange filing, Torrent Power Ltd. has announced that its shareholders have approved the scheme of transfer of the company’s electrical cable business to TCL Cables Pvt Ltd.
September 17, 2020
According to the media reports, the proposal was approved with 99.98 per cent of the valid votes cast in favor of the proposal. The board of TPL, it may be mentioned, had approved the proposal in November 2019.
The scheme involves transfer of cable business unit (CBU) from Torrent Power Ltd to TCL Cables Pvt. Ltd. as a going concern, on slump sale basis.
TCL Cables Pvt Ltd (TCPL) was incorporated in October 2019 as a step-down wholly-owned subsidiary of Torrent Power Ltd (TPL). Subsequently, TCPL became a direct wholly-owned subsidiary of TPL. As per the resolution now approved, the electrical cable business of TPL will now the sold to TCPL, on a slump-sale basis.
TPL is engaged in the business of power generation, transmission and distribution, with a geographical footprint spanning Gujarat, Maharashtra, Karnataka and Uttar Pradesh. On the other hand, TCPL will be solely engaged in the manufacture and sale of electrical cables.
Torrent Power Ltd has clarified that the scheme of arrangement does not involve merger of amalgamation. “It involves transfer of cable business unit (CBU) from TPL to TCPL as a going concern, on slump sale basis.”
The rationale behind this restructuring is:
- To facilitate each business to be effectively integrated for achieving growth & expansion of each of the verticals independently
- to enhance management focus and operational flexibility
- to attribute appropriate risk and valuation to different businesses based on their respective risk-return profile and cash flows
In FY19, the cables business of Torrent Power Ltd contributed Rs.359.57 crore to the company’s total income, representing a share of 2.72 per cent.
As of September 30, 2019, the net worth of the cables business stood at Rs.209.89 crore, accounting for 2.17 per cent of the total networth of Torrent Power Ltd. It may be recalled that the cables business of Torrent Power Ltd was originally carried out through Torrent Cables Ltd, which was incorporated in the 1980s. Torrent Cables Ltd was merged with the parent entity Torrent Power Ltd, in 2015.