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Godrej Soaps demerger okayed -- Equity being split at 60:40

Our Bureau

MUMBAI, Dec. 8

THE board of directors of Godrej Soaps Ltd (GSL) has approved the scheme of demerger of its consumer products business, with the paid-up equity capital being split in the ratio of 60:40. The demerger will come into effect on April 1, 2001.

The residual company will hold 60 per cent (Rs 35.89 crore) of the paid-up capital of GSL of Rs 59.82 crore and the new company will hold 40 per cent -- Rs 23.93 crore.

Post-demerger, shareholders of the original GSL will hold two sets of shares -- Rs 6 face value share of Godrej Industries Ltd, the residual company of GSL, and Rs 4 face value share in the new company, Godrej Consumer Products Ltd (GCPL). Currently the face value of a GSL share is Rs 10.

GSL had in July 2000 announced a plan to split its businesses into two entities. Under the demerger plan, the consumer products business will be transferred to a new company while the chemical business and other investments will continue to remain in the original company.

The current subscribed and paid-up capital of GSL is Rs 59.82 crore comprising 5,98,28,780 shares of Rs 10 each. Post-demerger, the capital of the residual company, Godrej Industries Ltd, will fall to Rs 35.89 crore divided into 5,98,28,780 shares of Rs 6 each. The capital of GCPL will be Rs 23.93 crore -- 5,98,28,780 shares of Rs 4 each.

``This demerger will create a new company which will be focussed on the FMCG sector and will enhance shareholder value,'' the company's press release said quoting Mr Adi Godrej, Chairman of Godrej Soaps Ltd.

Announcing the demerger plan in July, Mr Godrej had said this is a ``classical demerger case where the shareholding pattern in the two entities will be identical''. However, the company is yet to decide on the board constitution for the demerged entities .

The company is in the process of seeking approvals from the High Court, shareholders and the regulatory authorities.

The company also said that the initial public offering of Godrej Sara Lee Ltd has been deferred on account of the current market scenario. Godrej Sara Lee has received the acknowledgement card from the Securities & Exchange Board of India.

The IPO plan was part of the restructuring exercise carried out by GSL. The Godrej group holds 48 per cent stake in Godrej Sara Lee, 51 per cent being held by Sara Lee Mauritius Holding Pvt Ltd and 1 per cent held by Mr A. Mahendran, Managing Director of the company.

Post-public offer, the Godrej group will reduce its holding in Godrej Sara Lee from 48 to 24 per cent while Sara Lee would continue to retain its 51 per cent holding in the company. Mr Mahendran's stake of 1 per cent will also be on offer.

Currently, GSL holds 25.5 per cent in Godrej Sara Lee. Most of the divestment is to be made from the holding of GSL and some from Godrej & Boyce.