Demerger

A part of existing company - a new company - which

operates separately
Shareholders of original company get equivalent
stake in new company
Segments operate smoothly and focus on specific
task
Reasons for demerger:
to concentrate on core activities
to comply with the laws & regulations of the place

where it wants to establish its presence

division reached a point where it would be more
profitable for it to become a separate entity
parent company changing direction so division spun
off so that division can meet needs of existing clients
and parent can focus on new markets
basic idea demerger will prove beneficial to all
parties concerned

Reasons
for
demerger:

(1)Corporate attempt to adjust to changing economic and

political environment of the country;
(2)Strategy to enable others to exploit opportunity effectively
to optimize returns when the parent company is unable to do
so;
(3)To correct the previous investment decisions where the
company moved into the operational field having no expertise
or experience to run the show on a profitable basis;
(4)To help finance an acquisition;
(5)To realize capital gains from the assets acquired at the time
when they were under performing and now no better
performance, capital gain can be realized;
(6)To make financial and managerial resources available for
developing other more profitable opportunities;
(7)Selling unwanted and surplus or unconnected parts in the
business as a restructuring strategy to get rid of sick part of
the company.

Welspun Corp Ltd

2nd Largest (Large Diameter) Pipe Producer
WCL-flagship company of Welspun Group
largest pipe manufacturing company in the world
Incorporated

in 1995, the Company offers a

complete range of high grade line pipes ranging
from inch to 100 inch used inter alia for
transmission of oil & gas

along with its subsidiaries-hot rolled steel plates

and coils, gas based sponge iron, infrastructure, oil
and gas exploration, energy and power generation

Presence across five business verticals - Pipes,

Plates & Coils; Home Textiles; Steel; Infrastructure;

and Energy.

Structure Post
Demerger
WCL Welspun Corp Ltd
Ltd

WEPL Welspun Enterprises

Highlights Of Demerger
Aim of simplifying Welspun Groups multiple

businesses
WCL pipe and plates business
WEPL steel, infrastructure, oil and gas

exploration, energy
no dilution of the existing shareholders stake
new entity will be listed on the stock exchange
net debt for Welspun Corp would decline to the

tune of Rs 1,100 crore for FY13

Approval of Gujarat High Court

Benefits
Greater flexibility
Adopt independent capital structures
Greater investment choice for shareholders
Closer Alignment
Driving accountability