In an effort to streamline operations, the board of Welspun Living Ltd. authorized plans on Thursday to combine Welspun Home Solutions Ltd. with Welspun Advanced Materials (India) Ltd. Both are the parent company’s fully-owned subsidiaries.
According to an exchange filing, Welspun house Solutions has not yet started its business operations despite being incorporated to manufacture house textiles.
Welspun Advanced Materials produces advanced materials, nonwovens, technical textiles, and home textiles, among other products.
All of Welspun Advanced Materials’ shares in Welspun Home Solutions’ share capital will be cancelled upon the proposed plan’s implementation, with no further action or deed required. Therefore, according to the statement, Welspun Advanced Materials will not issue any new shares or make any payments to Welspun Home Solutions’ shareholders.
The reason for amalgamation
Welspun Living stated that by establishing all of the new manufacturing sites under a single company, the amalgamation plan will enable the simplification and streamlining of the business structure.
According to the corporation, cutting out redundant expenses will result in lower operational, administrative, and overhead costs as well as increased cost and operational efficiencies.
Additionally, by utilizing the merged company’s financial power, simplifying legal and regulatory compliances would increase total shareholder value.
By utilizing the combined assets, capabilities, experience, expertise, and infrastructure, the merger also presents development potential. Additionally, it helps the transferee company manage its cash flow more effectively by giving it unrestricted access to funds that may be strategically used for future expansion and growth, according to Welspun Living.
Prior to the announcement, Welspun Living’s share price closed 1.13% higher at Rs 165.2 a share, while the benchmark BSE Sensex saw a 1% advance. The stock has increased by 15% so far this year.
