Indias Welspun Corp. plans to split its business in two,
with all assets not related to its core steel tube and plate
business being spun off into a new company.
The core company, which claims
to be the second-biggest pipe producer in the world with an
output capacity of 2.43 million tonnes per year, will continue
under the Welspun Corp. name.
The firms remaining steel
businesses, as well its infrastructure, oil and gas, and energy
units, will be demerged and become Welspun Enterprises.
"We believe that the demerger
will create two focused, independently run companies with
enhanced value creation across each business. We are committed
to all of our businesses," Welspun chairman B.K. Goenka
Welspun operates four pipe
plants in India, one in the United States and another in Saudi
The steel operations under
Welspun Enterprises include a 60,000-tonne-per-year plant in
Maharashtra, India, which produces rebar and seamless pipe. It
also operates Welspun Maxsteel in Maharashtra, which produces
hot-briquetted iron and direct-reduced iron at a
The company announced that the
board of directors had approved the reorganization of the
business into two distinct and focused listed companies at a
meeting on May 30. However, the proposal is subject to court
approval, the company said.
After demerger, 64 percent of
both companies will be held in public shares, and
Welspuns net debt will decline to $126 million for its
fiscal year ended March 31.
The company said the vertical
demerger creates a mirror shareholding across both entities,
resulting in no dilution for existing shareholders.
Welspun said it expects the
merger to become effective Jan. 31.
A version of this article was first
published by AMM sister publication Steel