Marico Ltd has announced restructuring of its business, corporate entities and organization effective April 1, 2013. In an attempt to consolidate its fast moving consumer goods (FMCG) business, the company plans to demerge its Kaya arm to make it a separate listed company as Marico Kaya Enterprises Ltd.
While Sugata Gupta, who currently heads CPB will lead the overall FMCG Business, would be the chief executive officer (CEO) of Marco, Vijay Subramaniam who currently heads the International FMCG business would be appointed as the Kaya CEO post demerger. Gupta will continue to report to Harsh Mariwala.
The company board has already approved the demerger plan, a company statement said.
This restructuring is a proactive step to build on Marico’s sustained value creation, by proactively re-organizing itself, taking into account the context of increasing convergence of businesses in consumer products business (CPB) in India and the International FMCG businesses (IBG) and Kaya’s distinct potential to create value as an independent business.
The Consumer Product Business (CPB) and International Business Group (IBG) will now form a unified FMCG business. Kaya will be sharply re-defined as a separate business.
Marico Limited is currently the apex corporate entity, which effectively owns all businesses in the group. It proposes to create two separate companies through partitioning of the current Marico Limited, into an FMCG Business Company which is Marico Limited (already in existence) and a Kaya Business Company which will be Marico Kaya Enterprises Limited (MaKE, to be formed) or any such other name as may be approved by the Registrar of Companies.
As a consideration, the shareholders of Marico Limited as on the record date, a date likely to be in June or July 2013, shall be issued 1 share of MaKE with a face value of Rs. 10 each to be issued at a premium of Rs 200 per share for every 50 shares of Marico with a face value of Re. 1 each. Consequently, the shareholding structure of MaKE will mirror the shareholding structure of Marico Limited. The Exchange ratio may create fractional entitlements. There will be the customary mechanism for cash being paid to the members of Marico in proportion to their respective fractional entitlements.
MaKE will also be listed on the BSE and the NSE, just like Marico Limited is and will continue to be. Listing may take about 60-75 days from the date of receipt of approval of the Scheme of Arrangement from the Court.
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MaKE will have its own separate Board of Directors, distinct from Marico’s Board. Harsh Mariwala will continue to be the Chairman and Managing Director of both Marico Limited and Marico Kaya Enterprises Limited.
There is unlikely to be any adverse impact on the income statement of Marico Limited or Kaya Limited or MaKE pursuant to the Scheme of Arrangement except for the costs of executing the proposed Scheme. These costs are not expected to be significant.
The Company believes this corporate restructuring will lead to enhanced shareholder value through:
· Sharper focus and greater energy across both organizations and businesses
· Synergies across the value chain, product portfolios, talent pool and capability through an integrated FMCG business, in India and overseas
· Resurgence in the Kaya Business through a distinctly entrepreneurial approach and independent leadership team
· More customized ways of managing Kaya-specific talent
Kaya has, over just a decade, become a highly recognized brand in India. It is the market leader in the Middle East - recognized as a SUPERBRAND for the past three years in a row. Our investment in DRx clinics, Singapore & Malaysia has further strengthened the Kaya proposition. We therefore continue to be strong votaries of Kaya’s potential.