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Great Eastern Shipping splits
By agencies
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Thursday, 01 September 2005, 19:30 IST
MUMBAI: Great Eastern Shipping Company (GE Shipping) has formally split. On Wednesday, IndiaÂ’s largest private shipping company announced its much-awaited restructuring - a vertical split - involving the demerger of its offshore oilfield services, consisting of drilling services, marine logistics, marine construction and port/terminal services. Vijay Sheth, Managing Director of GE Shipping, will take charge as MD of the demerged company.
Bharat Sheth, currently Deputy Chairman and MD, will continue to head GE Shipping. KM Sheth, Chairman of GE Shipping, is unlikely to assume any responsibilities in the new company.
All the assets under the offshore division as on March 31, ‘05, will be shifted to the new company. Around 80 people who are currently working for the division will also be transferred to the new entity, which will be headquartered at Energy House on DN Road in Mumbai.
Both Bharat and Vijay Sheth said that the company restructuring was initiated to enhance shareholder value, and that it has not stemmed from any personal differences. They said the Sheth family members would all continue holding their shares in GE Shipping. The promoters hold around 25 percent equity in the company.
Bharat Sheth said the board of GE Shipping has formed a committee, which would soon appoint consultants to undertake valuation, and firm up share entitlement ratios. The new company will be formed after going through the high court-approved process.
In a notice to the BSE, the company said the demerger, which would be in compliance with the provisions of Section 2 (19AA) of the Income Tax Act, is viewed as an efficient tax neutral and shareholder-friendly mechanism to restructure businesses. “It places value directly in shareholders’ hands by issuing directly to the shareholders of GE Shipping shares in the listed offshore services company,” it said.
Shares of the new company will be proportionately allotted directly to shareholders in accordance with a scheme of arrangement, which will be formulated in the coming months. Vijay Sheth said the shareholding in the new company would mirror that of GE Shipping. Consequently, the share capital of the company is proposed to be commensurately reduced. It will be listed on the two stock exchanges where GE Shipping is currently listed - BSE and NSE.