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Sterlite Technologies jumps after board approves a corporate restructuring plan

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Sterlite Technologies jumped 4.82% to Rs 66.35 at 14:30 IST on BSE after the company's board approved a Corporate Restructuring plan.

The company made the announcement during market hours today, 18 May 2015.

Meanwhile, the S&P BSE Sensex was up 195.56 points or 0.71% at 27,519.24.

On BSE, so far 21.48 lakh shares were traded in the counter as against average daily volume of 2.89 lakh shares in the past one quarter.

The stock hit a high of Rs 69.50 and a low of Rs 63.60 so far during the day. The stock had hit a 52-week high of Rs 79.30 on 18 November 2014. The stock had hit a 52-week low of Rs 29.40 on 15 May 2014.

The stock had outperformed the market over the past one month till 15 May 2015, falling 1.02% compared with Sensex's 5.12% fall. The scrip had also outperformed the market in past one quarter, declining 1.63% as against Sensex's 6.09% fall.

The mid-cap firm has equity capital of Rs 78.81 crore. Face value per share is Rs 2.

As a result of this restructuring, Sterlite Technologies will become a pure-play Telecom Products & Solutions company providing Broadband Solutions for Fully Converged Networks. The board approved to demerge the Power Products Business and the Power Transmission Grid Business into a separate entity named Sterlite Power Transmission (SPTL).

Considering the differentiated attributes, the inherent business models and capital requirement of each of these business, the equity shares of the telecom business will continue to be publicly listed, while those of the formed power business will remain unlisted. The decision to keep the equity shares of the power business unlisted is in line with the global model for such infrastructure companies, which are not amiable to quarterly public market reporting requirements and need operational freedom and capital structure flexibility.

Once the demerger scheme is effective, after due regulatory approvals, STL's shareholders will continue to retain their equity share of Rs 2 in STL (pure-play telecom company). Additionally, for every five equity share of Rs 2 each held in STL, the shareholders will have an option to receive one equity share of Rs. 2 each of SPTL issued at a premium of Rs 110.30 or one Redeemable Preference Share (RPS) of Rs 2 each issued at a premium of Rs 110.30 each. The shareholders will have the option of continuing to be invested in SPTL or redeeming the RPS through liquidity options. The RPS will be redeemable within 30 days of issue if opted for. The value of the demerged undertaking after taking into consideration the allocation of debt would be Rs 885 crore, implying a value of Rs 22.46 per equity share of STL. Post this, as of 31 March 2015, on a proforma basis STL will retain a consolidated net debt of Rs 674 crore against a pre-restructuring consolidated net debt of Rs 4881 crore. The Appointed Date for the demerger is 1 April 2015, and the demerger is expected to be completed by Q4 March 2016.

Sterlite Technologies also announced its Q4 results today, 18 May 2015. The company's net profit jumped 285.51% to Rs 39.13 crore on 51.62% rise in net total income from operations to Rs 979.10 crore in Q4 March 2015 over Q4 March 2014.

The company has a strong order book of Rs 4711 crore as of 31 March 2015, against Rs 2521 crore as at 31 March 2014. Current order book represents nearly 1.5 times of FY 2015 revenue.

Sterlite Technologies (STL) develops & delivers products, solutions and infrastructure for telecom & power transmission networks, globally.

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First Published: Mon, May 18 2015. 14:10 IST