Crompton Greaves to demerge consumer products business

NEW DELHI: Crompton Greaves Ltd, the flagship company of the Avantha Group, has decided to vertically demerge its consumer products business into a separate entity, a major modification in its previous restructuring plan. The new plan was approved at board a meeting on Thursday.

“The board has now reconsidered and approved the contours of the proposed demerger and decided to implement a 100% demerger of the consumer products business, such that the shareholding pattern of the resulting consumer company shall mirror the shareholding pattern of CG (Crompton Greaves),” the company said in a disclosure to the stock exchange.

The board “evaluated salient aspects of the scheme of arrangement with respect to demerger of consumer products business of the company” based on comments by the capital market regulator, the stock exchanges and investor feedback, the company said. ET had first reported the plan on Thursday.

The board had approved a different demerger scheme in October 2014. The consumer products business was to be hived off into a new entity—Crompton Consumer Products (CCPL)--and its ownership was to be split three ways.

Crompton Greaves would have retained 25% plus one share of CCPL and the remaining 75% minus one share would have been distributed among the shareholders of Crompton Greaves that include the Thapar family (the promoters) and public shareholders.

As a result, Crompton Greaves would have kept the industrial business and been a holding company for CCPL. Avantha had planned to keep control of Crompton Greaves and focus on the industrial business.