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Soap to IT services business conglomerate Wipro on Friday received the shareholders’ nod for its plan to spin itself off into two different business units. The billionaire Azim Premji-promoted Wipro had earlier this year announced its intention to demerge its business into Wipro and Wipro Enterprises. In line with the proposed plan, the IT services arm would remain a listed company under the brand Wipro, while the consumer care, lighting and engineering services businesses will come under the brand Wipro Enterprises, which will be unlisted.
At an extraordinary general meeting, organised on Friday on the direction of Karanataka High Court, the shareholders of the Bangalore-based company approved the demerger plan.
Wipro said, "We write to inform the stock exchanges that the shareholders at the court convened meeting held on December 28 have approved the scheme of arrangement between Wipro, Azim Premji Custodial Services and Wipro Trademarks Holding."
According to some shareholders with whom Business Standard spoke to said, the meeting was chaired by the Wipro’s CFO and Executive Director Suresh Senapaty, and majority of the shareholders agreed to all the three options the company announced in November.
They also said the EoGM was primarily on the agenda of seeking approval for the demerging Wipro Ltd into two entities and the options offered for shareholders as part of the company’s plan.
Under the demerger plan,Wipro shareholders have three options.They can receive one equity share with face value of Rs10 in Wipro Enterprises for every five equity shares of Rs.2 each in Wipro that they hold; or receive one 7 per cent redeemable preference share in Wipro Enterprises,with face value of Rs.50,for every five equity shares of Wipro that they hold;or exchange the equity shares of Wipro Enterprises and receive as consideration equity shares of Wipro held by the promoter. Each Redeemable Preference Share shall have a maturity of 12 months and shall be redeemed at a value of Rs.235.20.
The demerger is expected to be completed by the next fiscal year. The non-IT servics business contribute about 14 per cent of the total revenues of the company.In fiscal year 2011-12, the IT business contributed to 86 per cent of revenue and 94% of operating profit of Wipro Limited.
When asked about the structure of the newly formed entity and media reports of appointing Rishad Premji on the Board of Wipro Enterprise, shareholders said, “These points were not discussed in today’s meeting.”
The company had said at the time of announcement of the demerger that Azim Premji would be non-executive chairman of Wipro Enterprises.