- 27 Dec 2024
- ICICI Securities
BOARD APPROVES SCHEME OF ARRANGEMENT
News: SKF India has approved a scheme of arrangement to demerge its Industrial Business into a wholly owned subsidiary, creating two listed companies with mirror shareholding, with the resulting company (SKF India Industrials) housing the industrial business and SKF India housing the automotive business. As part of the demerger, SKF India Industrial will issue 1 equity share for every share held in SKF India. All new shares of SKF Industrial will be listed and will be admitted for trading on BSE and NSE. The proposed transaction is subject to receipt of requisite approvals from statutory and regulatory authorities.
Views: We believe that the scheme of demerging Industrial business (which contributes 63% to total revenues as of FY24) will create better visibility and understanding of both the businesses. With focus on improving capital allocation and operational efficiency in the two separate businesses, we believe that this will unlock more value to shareholders. Company remains focused on increasing localisation in industrial business which will help the company in securing more orders and margin improvement.
Impact: Positive