DEMERGER

CES Ltd's demerger scheme benefits whom out of all stakeholders?

CES Limited is an Information Technology (IT) and Information Technology Enabled Services (ITES) provider, dedicated to serving the midsize market of global enterprises. It has mainly two divisions i.e., IT Division and ITES Division. The Company is listed on BSE Limited and has only 26 shareholders.

The Transaction:

Management of CES Limited (Demerged Company) proposed the demerger of the "ITES Business" into its presently "wholly owned subsidiary" i.e., CES Technology Private Limited (Resulting Company) on going concern basis through scheme of arrangement.

Appointed Date fixed for this transaction is 1st April 2022 and the scheme will become effective from the date of filing certified copy of the scheme with the Registrar of Companies.

Shareholding Pattern of CES Limited:

Shares of CES Limited are not frequently traded. Out of 14 shareholders, few shareholders might not be traceable since they are still holding the shares in physical form.

ITES Division getting demerged has Total Assets of Rs.45.50 Crores consist of majorly Investments in the subsidiary companies in India, USA and Trade Receivables.

Since the investment in the foreign subsidiaries is getting transferred, post scheme of arrangement, Resulting Company will have to comply with the FEMA Compliances w.rt Overseas Direct Investment.

Scheme of Arrangement also providing for the following:

1. Delisting of the Demerged Company from stock exchange.

2. Reorganization of capital of Demerged and Resulting Company

Rationale of the Scheme: