Jindal Stainless gains on de-merger plan

The company on Monday announced plans to demerge business into three verticals via slump sale route

Jindal Stainless has surged around 3% to Rs 40 in the BSE after the company said on Monday that it would de-merge its ferro-alloys, coke oven and stainless steel businesses into three different entities via the slump sale route in a bid to reduce its mounting debt and to ensure better management of its business verticals.
 
According to the de-merger plan, shareholders of Jindal Stainless Ltd will be issued shares by the resulting de-merged company, Jindal Stainless (Hisar), under the share entitlement ratio of 1:1, the company said in a BSE notification.
 
Analysts said the de-merger would only distribute the hefty debt of Rs 11,600 crore as on March 31, 2014 to the three de-merged entities, which does not really resolve the company’s issues. However, the de-merger opens the door for the company to sell-off some of its assets - those that are relatively stable such as coke oven and generate fresh cash, which could help reduce debt.
 

 
The stock opened at Rs 41 and has hit a high of Rs 42, till 9:20 hrs while around one lac shares have changed hands on BSE and NSE combined.