Godawari Power & Ispat stock was in the fast lane on Wednesday after the company announced a bonus share issue and stock splits. The company has also received approval for withdrawing the demerger of Power Business Undertaking of Jagdamba Power & Alloys. Also, the company will withdraw divestment of stakes in GGEL, meanwhile, proposed equity purchase in the latter.
At around 11.19 am, the company’s stock was trading at the upper circuit of Rs1333.35 per piece up 5% on Sensex.
On Tuesday, the company’s board proposed a stock split of equity shares having a face value of Rs10 each into 2 equity shares having a face value of Rs5 each. On the stock split, Godawari said ” to improve the liquidity of the Company’s Share on the Stock Market and also to facilitate small investors to deal in our shares.”
The stock split is expected to be completed in approximately two to three months including the time required for seeking approval of the shareholders.
Moreover, Godawari said that to further improve the liquidity in shares of the Company and larger participation in equity shares of the Company by public shareholders and reward the long term shareholders of the company, it has been decided to issue bonus shares in the ratio of 1:1 by capitalizing the free reserves after the proposal for the split of the shares is approved by the Shareholders of the company.
The Bonus issue is proposed out of share premium account and free reserves created out of profits. Under the bonus ratio, one Equity Share of Rs.5 each as Bonus for every one Equity Share of 5 each fully paid up (Post Sub-division of the Company.
Meanwhile, the board approved to increase the Authorised Equity Share Capital of the company from existing Rs49.80cr to Rs70.80cr by the creation of additional 2.1 Crore Equity Shares of Rs10 each (4.2cr Equity Shares of Rs5 each post-Sub-Division) subject to the approval of the Shareholders of the Company.
Furthermore, the company announced that the board decided to withdraw the Scheme of Arrangement for the demerger of Power Business Undertaking of Jagdamba Power & Alloys Limited (“Demerged Company”) and merge into Godawari Power & Ispat Limited (“Resulting Company”).
On the demerger, Godawari said that the Board was expecting to complete the process of demerger in a period of 6 to 8 months but because of the ongoing pandemic there was a delay and even the first motion of application ha taken over 19 months and is still not complete.
In order to obtain the approval of the Shareholders of the Company for Sub-division of Shares, Issue of Bonus Shares, Increase in Authorised Share Capital and for Alteration of Capital Clause of Memorandum of Association of the Company, it has been decided to convene and hold an Extra-Ordinary General Meeting of the shareholders of the company on October 14, 2021.