Minority shareholders of GE T&D India have not approved the proposed sale of its Global Engineering Operations Division (GEOD) to GE India Industrial Pvt Ltd (GIIPL).
In an investor presentation, GE T&D India said that it could not secure majority approval of minority shareholders (via postal ballot) of the proposed sale of GEOC to GEIIPL.
With the result, around 190 employees and Rs.10 crore worth of assets have turned redundant. In order to mitigate restructuring cost of impacted employees and assets, the board of GE T&D India Ltd has advised the management to explore potential solutions to minimize adverse impact on the company.
Background
GEOD was mainly entrusted with short term, non-exclusive contracts and purchase orders for global engineering services with other companies in the GE Grid Solutions division, outside India.
On April 30, 2021, GE T&D India announced to stock exchanges that it was formally notified by GE Grid Solutions that effective June 30, 2021, no new contracts/purchase orders will be issued to it (GE T&D India Ltd) in relation to those services, and that existing contracts/purchase orders would lapse at their expiry date or would be terminated by notice. Incidentally, revenues from GEOD accounted for less than 3 per cent of the total revenues of GE T&D India Ltd.
GEOD was independently valued at Rs.87 crore by Ernst & Young Merchant Banking Services LLP.
Responding to the situation, GE T&D India Ltd had indicated that the GEOD would be most impacted by this decision of GE Grid Solutions, and that GE T&D India was exploring the possibility of redeployment of affected employees.
Meanwhile, the board of GE T&D India Ltd, in January 2021 itself, had approved the sale of GEOD to group company GE India Industrial Pvt Ltd (GEIIPL). The sale of GEOD to GEIIPL was subject to approval by shareholders, which ultimately did not come through.
(Featured photograph (ge.com) is for illustration only)
