Board of Gujarat gas approves merger/demerger plans involving GSPL and GSPC
Sep 01, 2024
Ahmedabad (Gujarat) [India], September 1 : Gujarat State Petronet Limited (GSPL) has approved a significant restructuring plan that will see the merger of Gujarat State Petroleum Corporation (GSPC), GSPL, and GSPC Energy Limited (GEL) into Gujarat Gas Limited (GGL).
According to the company, this move is aimed at enhancing business synergy, operational efficiency, and simplifying the holding structure of these entities. The decision was announced following a board meeting, with the merger ratios and further details outlined by the company.
"Board of Directors of all respective companies have approved 'The Scheme of Arrangement' in the Board meetings held on 30th August 2024" the company said.
Under the terms of the merger, GSPC shareholders will receive 10 shares of Gujarat Gas for every 305 shares held, while GSPL shareholders will receive 10 shares of Gujarat Gas for every 13 shares held.
The company also stated that following the merger, a pure-play gas transmission unit, GSPL Transmission, will be carved out and separately listed on the stock exchanges. This new entity will focus exclusively on gas transmission, allowing for a more streamlined and focused operation.
The listing of GSPL Transmission is expected to provide transparency and create additional value for shareholders by offering them a direct stake in the gas transmission business.
By merging these entities, the company aims to achieve significant operational scale and efficiency. The amalgamation is expected to lead to enhanced coordination between gas sourcing, trading, and distribution activities, which could improve the overall profitability of the combined entity.
Currently, GSPC owns a 37.6 per cent stake in GSPL, while GSPL holds a 54.2 per cent stake in Gujarat Gas. This layered holding structure has been complex, and the merger will simplify it by consolidating these stakes under a single entity.
The company also added that the merger is anticipated to unlock significant value for shareholders by eliminating related party transactions. For instance, Gujarat Gas currently purchases gas from GSPC. With the merger, this related party transaction will be eliminated, potentially enhancing the operating profits of Gujarat Gas.
Additionally, Gujarat Gas will become the only city gas distribution (CGD) company with direct access to gas sourcing and trading, further boosting its competitive edge.
