Sterlite Power Transmission Ltd (SPTL) has announced the strategic decision to demerge its Power Transmission Infrastructure business (BOT model), spread across India and Brazil.
The Power Transmission Infrastructure business encompasses the transmission assets in India and Brazil, which will now be transferred to Sterlite Grid 5 Ltd (SGL 5).
Both SPTL and SGL5 will have independent boards and focused executive management teams. Under the Board of Directors-approved demerger scheme, existing Sterlite Power shareholders will receive one additional share of SGL5 for every share of SPTL they hold.
Post the demerger, SPTL entity will continue to hold the Global Products & Specialised EPC Services business as well as the Convergence – Fiberco business.
This move comes as part of the Company’s intent to create ‘pure play’ business verticals based on their end-customer base, investor class and returns.
Unlocking value
Commenting on the development Pratik Agrawal, Managing Director, Sterlite Power Transmission Ltd, said, “The demerger will enable both entities to create independent capital structures, unlock value and attract investors suitable for the distinct growth profiles for each entity. We are confident that this will bring substantial value for our shareholders and help us in creating two world class business entities.”
Healthy demand
Globally, the power transmission network is expected to double in the next eight years to meet aggressive renewable energy additions. The demand for power products is expected to remain strong over the medium term on the back of healthy demand, amid aggressive global capex earmarked for renewables capacity addition, T&D expansion, benefits from ‘China+1’ theme and favourable tariff structures in the US, the release said.
Approval process
The company has filed the demerger scheme with National Company Law Tribunal (NCLT) Mumbai for approval. The approval process is expected to be concluded within the next 6-8 months, as it entails securing a range of approvals, including those from shareholders, creditors, and various regulatory authorities.
Current portfolio
Sterlite Power currently has a power transmission portfolio of 32 completed, sold and under construction projects covering approximately 15,350 ckm of transmission lines across India and Brazil.
Also read: Sterlite Power Secures New Orders Worth Rs.1,300 Crore In Q1 Of FY24
Featured photograph (source: Sterlite Power) shows an element of the Lakadia-Vadodara interstate transmission system (ISTS) scheme, developed by Sterlite Power.
