PC Jeweller Ltd (PCJL) Sunday said its board has given approval for the demerger of the company’s export division and amalgamation of the same with its wholly-owned subsidiary PCJ Gems & Jewellery Ltd.
“…the board of directors of the company in its meeting held yesterday i.e. May 11, 2019, has considered and approved the scheme of arrangement for demerger of ‘export division’ (demerged undertaking) of PC Jeweller Ltd (demerged company) and subsequent amalgamation of the same with its wholly owned subsidiary company i.e. PCJ Gems & Jewellery Ltd,” a regulatory filing said.
It added that the arrangement will be effective subject to the receipt of necessary regulatory and other approvals including of National Company Law Tribunal (NCLT) of relevant jurisdiction, Sebi, stock exchanges, shareholders and others.
The export division’s turnover stood at Rs 2,690.37 crore as on March 31, 2018, which is 28.35 per cent of PCJL’s turnover.
It has been realised by the board of the demerged company that the commercial activities of the two verticals are distinct and diverse from each other, the filing noted.
“In order to ensure sustainable long-term growth, profitability, market share and continuous customer service, both require focused management attention, different sets of skills and resources to meet competitive, regulatory environment and to mitigate risks,” it said.
The filing said the demerged company would be able to revise its business plans and priorities from time to time, thereby ensuring speedy and profitable growth of the two businesses and enhance shareholder’s wealth.
“In consideration of the demerger of the ‘export division’ all the shareholders of PCJL will get shares of the resulting company on the basis of share entitlement ratio, as defined in the scheme of arrangement and the shares of the resulting company will also be listed as per the provisions of this scheme and subject to the applicable compliances and regulatory approvals,” it said.
Thus, the scheme will enable creation of an independent listed company with replica shareholding structure with the ‘export division’ business.
‘Domestic division’ with domestic business (remaining business) would continue to be carried on in the demerged company, the filing added.