Elecon Engineering: 18.4% of investors vote against restructuring

In a recent meeting to approve the restructuring in Elecon 18.4 per cent of the equity shareholders, by value, voted against the scheme of arrangement.

This is more than the 14.84 per cent that domestic institutions and foreign institutional investors held in the company, as on June 30, 2012. Proxy advisory firm Institutional Investor Advisory Services (IiAS) had asked investors to vote against the proposed scheme.

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The move comes weeks after Naveen Jindal-led Jindal Steel & Power saw significant amount of institutional votes going against a resolution to authorise the chairman to revise pay packages of top executives.

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Recently, Elecon announced it would be restructuring the businesses of its promoter companies Prayas Engineering Ltd (Prayas) and EMTICI Engineering Ltd (EMTICI), with its wholly owned subsidiary Elecon EPC Projects Ltd (Elecon EPC) and itself. 

The stock corrected five per cent the day Elecon’s board approved the scheme of arrangement.

Before the restructuring, the promoters held 45.99 per cent in Elecon Engineering Co Ltd and Elecon EPC was a wholly owned subsidiary of Elecon Engineering Co Ltd. However, post-restructuring the power transmission business (PT) of Prayas and EMTICI would be transferred to Elecon while the material handling equipment business (MHE) of Elecon, Prayas and EMTICI would be transferred to Elecon EPC. 

This restructuring of businesses would help the promoters increase their shareholding in both the MHE and PT businesses (in Elecon EPC it increases from 45.99 per cent to 72.15 per cent, and in Elecon it increases from 45.99 per cent to 53.96 per cent). The move would also give majority control of over 50 per cent to the promoters in the decision making process of both companies.

Read More: business-standard.com