Demerger , case study of Larsen and Toubro limited Such divisions may take place for various reasons internal or external . . by both these methods .1956 ` Clause (B) of sec 390 ² ´arrangementµ includes a reorganization of the share capital of the company by the consolidation of shares of different classes OR by the decision of shares into shares of different classes OR .Demerger under companies act . .court will not sanction a scheme of compromise or arrangement which is beyond powers of company ² defined in MOA .Procedural aspect in respect of demerger ` Scheme must be within company·s powers . .company may alter relevant clauses in its MOA to get sanctioned . will be declined according to this principle second time as well.Res Judicata ² rejected proposed scheme again proposing . . From no.37 form of proxy ² rule 73 .34 affidavit in support of summons ² rule 67 From no.35 order on summons for directions ² rule 69 Form no36 notice convening meeting ² rule 73 From no.Rules and forms in respect of scheme of demerger ` ` ` ` ` Form no. 33 summons for directions to convene a class meeting under section 391 ² rule 67 . 41 order on petition ² rule 81 . . From no. 38 advertisement of notice convening meeting of creditors / shareholders.` ` ` ` Form no. Form no. 39 report by chairman of the meeting ²rule 78 Form no. 40 petition to sanction the scheme of compromise or arrangement ² rule 79 . Leading in manufacturer and engineer in turnkey projects Diversified activities such as electrical . construction. . planned to demerge and concentrate on more infrastructure business . 1942 . ` ` ` L&T est.shipping .heavy engineering nad IT. cement manufacturing .Case ² larsen & toubro ltd intro«.medical equipments . By 2000.. Why demerger ? ` ` ` GIL (Grasim Industries) flagship of Aditya Birla Group wanted control over L&T management . Later the shareholders approved the demerger of L&T·s cement division ²Ultra Tech CemCo Ltd(UCL). First acquired 15% stake and made open offer to L&T shareholders to increase it . . L&T hold 20% and bal.3phases of demerger.60 per share and make open offer to other shareholders of another 30% at the same price.L&T Employee Welfare foundation would acquire the GIL·s 15. Second. ` ` ` First ²L&T spin off the cement business into new company .3% stake . . 80% would be existing shareholders of L&T. Third.GIL buy 8.Ultra Tech Cemco Ltd.5%UCL from L&T for 342. Ultra Tech Cemco.Demerger ratio . At the same time for every 5 shares held in L&T the shareholder was given 2 shares in the demerged cement company. . ` ` For every 2 shares (FV-10) held in L&T. shareholder was given 1 share in new L&T. Benefits of Demerger to L&T Lead to immediate realization of value from cement business ` Create 2 distinct listed entities for engineering . ` .cement Enable L&T to become focused Engineering .Construction and Technology Company. Benefits of Demerger to Grasim ` ` ` Economies of scale and overall competitiveness . Access domestic and international markets . Increased capacity . .
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