After demerger, the transmission infrastructure will be housed under Sterlite Grid 5 Limited, while the global products & specialised EPC services will continue to remain under SPTL. The simplified structure will allow each entity to attract a capital pool tailored to its requirements.
May 29, 2024
Sterlite Power Transmission Limited (SPTL), a leading power transmission developer and global products and solutions provider in India and Brazil, announced it has received approval from its equity shareholders, secured creditors, unsecured creditors, and non-fund-based lenders for the demerger of its transmission business.
The vote on the demerger proposal received 100 percent approval from secured creditors, 99.26 percent approval from unsecured creditors, 99.99 percent from equity shareholders present and voting, and 100 percent by the non-fund-based lenders.
The proposed demerger will empower both its businesses – the demerged Transmission Infrastructure (to be housed under Sterlite Grid 5 Limited) and Global Products & Specialised EPC Services (that will continue to remain under SPTL), to pursue independent growth strategies with greater agility and focus. The simplified structure will allow each entity to attract a capital pool tailored to its requirements.
The infrastructure business can target long-term, patient investors seeking predictable cash flow, while SPTL, focusing on the global products & services (GPS) business, can attract capital seeking higher returns typically suited for pre-IPO or capital market investors.
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Mr. Pratik Agarwal, Managing Director, Sterlite Power Transmission Limited, said, “This support from our stakeholders validates the strategic rationale behind the demerger. It is a significant milestone in our journey to create two future-ready businesses with distinct growth trajectories.”
The GPS business capped off a successful FY 24 with cumulative order wins worth INR 7,000 crore. It represented a 35 percent year-on-year (YoY) increase as compared to FY23, underscoring the growing global and domestic demand for robust power transmission infrastructure, particularly to support the integration of renewable energy sources.
Sterlite Grid 5 is also well-positioned to capitalise on substantial growth in the transmission infrastructure business. A robust transmission pipeline of INR 100,000 crore, including large-scale HVDC and green energy corridor projects, has been approved and will be bid out in the coming years under competitive bidding process. The fast pace of developments at the inter-state and intra-state level is providing a healthy pipeline and will improve evacuation for renewable energy projects under development.
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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 the ‘China+1’ theme and favourable tariff structures in the US.
The demerger will be implemented through a National Company Law Tribunal (NCLT) scheme of arrangement. Upon completion of the demerger process, all SPTL shareholders will hold identical shareholdings in both companies.
