Crompton Greaves jumps after board OKs demerging consumer products biz

Crompton Greaves jumped 9.85% to Rs 204.15 at 9:49 IST on BSE after the company said its board proposed to demerge its consumer products business unit into a separate listed company.

The company made the announcement before trading hours today, 17 July 2014.

Meanwhile, the BSE Sensex was up 17.10 points, or 0.07%, to 25,566.82.

On BSE, so far 6.75 lakh shares were traded in the counter, compared with an average volume of 5.96 lakh shares in the past one quarter.

The stock hit a high of Rs 208.90 and a low of Rs 198 so far during the day. The stock hit a 52-week high of Rs 219.25 on 11 June 2014. The stock hit a 52-week low of Rs 75.25 on 28 August 2013.

The stock had underperformed the market over the past one month till 16 July 2014, falling 7.61% compared with 1.43% rise in the Sensex. The scrip had, however, underperformed the market in past one quarter, rising 4.88% as against Sensex's 14.69% rise.

The mid-cap company has an equity capital of Rs 125.82 crore. Face value per share is Rs 2.

Crompton Greaves said that its board held its annual strategic review meeting on 16 July 2014 at Mechelen, Belgium. At this meeting, the board proposed to demerge its consumer products business unit into a separate listed company.

The board believes that such a demerger will create better growth opportunities for its two large but significantly different businesses - power, industrial and automation which is a business-to-business (B2B) business, and the consumer products business which is business-to-consumer (B2C). 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 company said in a statement.

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, the company said.

On a consolidated basis, Crompton Greaves' net profit jumped 152.6% to Rs 63.82 crore on 11.2% growth in net sales to Rs 3766.48 crore in Q4 March 2014 over Q4 March 2013.

Crompton Greaves is a global pioneering leader in the management and application of electrical energy. It provides electrical products, systems and services for utilities, power generation, industries, and consumers. The company is organized into three business groups: power, industrial and consumer.

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