New Delhi: Shares in Crompton Greaves rose over 15 per cent on Thursday to Rs 218.75 as the company's board proposed to demerge its consumer products business unit into a separate listed company.
In its annual strategic review meeting on July 16, Crompton's board proposed to demerge its consumer products business so as to create value for both of its consumer products business and and power & industrial automation business.
The consumer products division, which manufactures lights and fans, contributes about 20% to group's turnover and 50% to its earnings before interest and tax.
“The board also believes that this will create a more flexible capital structure for the two businesses to grow independently, allow them to pursue more ambitious strategic goals and, thus, create further value for existing shareholders. The Board has constituted a Committee of Directors to examine all relevant aspects of the process of demerger and listing and make suitable recommendations to the Board,” Crompton Greaves said in a filing to BSE.
Analysts view the demerger as positive positive news for the company as it will do value unlocking of its consumer products business.