The shareholders of soaps-to-IT services conglomerate Wipro have approved the company's demerger plan in a court convened meeting held in Bangalore on Friday. About 393 shareholders were present at the extraordinary general meeting including 18 from promoters and promoter groups.

In a statement published on the company's website, 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 Limited, Azim Premji Custodial Services Private Limited and Wipro Trademarks Holding Limited." 

 

The shareholders meeting was convened through a directive issued by the Karnataka High Court to get their nod for the demerger proposed by the company in November.

The Bangalore-based IT company said it would hive off its non-IT businesses into a separate unlisted company so that it could focus exclusively on information technology.

The new company -- Wipro Enterprises - will include Wipro Consumer Care & Lighting (including the furniture business),Wipro Infrastructure Engineering (hydraulics & water businesses),and medical diagnostic product & services business (through its joint venture withGE). Wipro promoter Azim Premji will remain the executive chairman of Wipro and will be the non-executive chairman in the new entity.

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% 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. The exchange ratio will be 1 equity share in Wipro for every 1.65 equity shares in Wipro Enterprises. 

Analysts saw the last option as a good and clever move to enable promoter Premji to reduce his stake in Wipro, so that the company's public float hits the SEBI mandated 25% of total shares. Premji currently owns 78.37%, and needs to reduce this to 75% by June next year. The company has 2,35,598 shareholders as of Friday. (Times of India)