The merger involves a composite scheme of arrangement between Wim Plast Limited (WPL), Cello Consumer Products Private Limited (CCPPL), and Cello World Limited (CWL), with two key steps: a demerger of WPL’s Manufacturing Business into CCPPL, and the subsequent merger of WPL’s remaining portion with CWL. The process is designed to streamline and enhance operational efficiency across the Cello World group.
Demerger of WPL’s Manufacturing Business
- Business Transfer: WPL will transfer its Manufacturing Business, including plastic moulded furniture, extrusion sheets, and air coolers, to CCPPL. This business accounted for 89.39% of WPL’s turnover for the six months ending September 30, 2024.
- Demerger Benefits:
- Focused Strategy: By creating a dedicated manufacturing vertical, CCPPL can allocate resources more efficiently, maximizing production efficiencies.
- Shareholder Value: WPL shareholders (excluding CWL) will receive CWL shares in exchange, allowing them to participate in a larger, diversified company.
- Risk Mitigation: Separating the business segments allows for focused management and reduces risk.
- Share Exchange Ratio: For every 100 equity shares of WPL, CWL will issue 55 new shares with a face value of INR 5, as determined by KPMG and reviewed by Ernst & Young.
Amalgamation of WPL with CWL
- Business Consolidation: Post-demerger, WPL’s remaining investment assets will merge with CWL, simplifying operations and enhancing efficiencies.
- Benefits of Amalgamation:
- Operational Efficiency: Merging assets will reduce compliance and administrative costs, streamlining CWL’s structure.
- Unified Management: Consolidating under one listed entity ensures a cohesive approach to operations, distribution, and customer engagement.
- Ownership Consolidation: The merger integrates ownership interests into CWL.
- Share Exchange Ratio: For every 100 WPL shares, CWL will issue 31 shares at INR 5 each.
Approvals and Compliance
- Related Party Transaction: Although CWL and WPL are related entities, the merger is exempt from Section 188 requirements due to regulatory allowances for amalgamations.
- Regulatory Approvals: The scheme requires clearances from the stock exchanges, NCLT, shareholders, and creditors.
- Impact on Shareholding: Post-scheme, CWL’s promoter holding will be 73.5%, with public shareholding at 26.5%.
The merger scheme aims to streamline operations, boost efficiency, and establish a more focused business model for the Cello World group.
