The Ruias-promoted Essar group will infuse fresh equity in its non-banking financial arm, India Securities (ISL), to relieve the company from its carry-forward losses of about Rs 28 crore.
The promoters plan to bring in fresh equity at Rs 70 a share, as against ISL's closing price of Rs 24.65 on the Bombay Stock Exchange on Monday.
A company executive told Business Standard that the group would spin off the investment division from ISL and merge it with a separately listed entity -- Essar Securities (ESL) -- after the equity infusion. ISL would continue to carry on its non-banking finance business.
“The promoters of ISL will bring in fresh equity which will help in offsetting ISL’s carry-forward losses of about Rs 28 crore. Post the demerger, the networth of ISL will stand at Rs 31 crore. ISL currently has a paid-up capital of Rs 26.5 crore,” the executive said.
The promoters have a shareholding of about 66 per cent in ISL. The group would bring in about 40 lakh shares as fresh equity in ISL and post the demerger, the promoter’s stake will go up to 73 per cent.
The shares of ESL will be automatically listed on the bourses after the demerger. The promoters will hold 74 per cent stake in ESL, with the remaining would be held by the public. It would take at least 60 days for the company to get listed.
ISL has convened a meeting of its shareholders on August 11 to seek their approval for de-merging the investment division. The scheme of demerger has been approved by the BSE.
Under the demerger plan, the equity base of ISL will be reduced by 40 per cent and the shareholders will receive an equivalent stake in ESL.