Solectron Centum to demerge EMS division

MUMBAI: Solectron Centum Electronics Ltd has said it will demerge the electronic manufacturing services (EMS) division into a new company, Solectron EMS India Ltd (SEIL).

The board of directors approved the hiving off of the EMS division through a scheme of demerger with the appointed date of October 1, subject to necessary approvals, the Bangalore-based company informed the Bombay Stock Exchange.

"This Demerger will bring better focus to the business and I am very excited about the various options for growth this demerger brings to the two business," Solectron Centum Managing Director Apparao Mallavarapu said.

As per the demerger scheme the current share capital of Solectron Centum would be equally divided between the two companies, it added.

For every two equity shares of Rs 10 each held by shareholders in Solectron Centum prior to the de-merger, the shareholders would be entitled to one equity share of Rs 10 in Solectron EMS India Ltd (SEIL) and in the company post de-merger.

The share capital of the company on October 1, was at Rs 14.80 crore and 74 lakh shares of the company would be cancelled under the proposed scheme. Post demerger, the equity capital of Solectron Centum would be Rs 7.40 crore and the equity capital of SEIL would be at an identical Rs 7.40 crore.

The demerger would be tax neutral in the hands of the shareholders and the companies. The shares of SEIL is proposed to be listed in the stock exchanges where the shares of the company are listed.

Shares of the company were trading at its upper circuit limit at Rs 206.85 on the BSE.