• A part of existing company - a new company - which operates separately

• Shareholders of original company get equivalent stake in new company

• Segments operate smoothly and focus on specific task

• Reasons for demerger: to concentrate on core activities to comply with the laws & regulations of the place

where it wants to establish its presence division reached a point where it would be more

profitable for it to become a separate entity parent company changing direction so division spun

off so that division can meet needs of existing clients and parent can focus on new markets

basic idea – demerger will prove beneficial to all parties concerned

Demerger

Reasons for demerger:(1)Corporate attempt to adjust to changing economic and

political environment of the country;(2)Strategy to enable others to exploit opportunity effectively

to optimize returns when the parent company is unable to do so;

(3)To correct the previous investment decisions where the company moved into the operational field having no expertise or experience to run the show on a profitable basis;

(4)To help finance an acquisition;(5)To realize capital gains from the assets acquired at the

time when they were under performing and now no better performance, capital gain can be realized;

(6)To make financial and managerial resources available for developing other more profitable opportunities;

(7)Selling unwanted and surplus or unconnected parts in the business as a restructuring strategy to get rid of sick part of the company.

Welspun Corp Ltd• 2nd Largest (Large Diameter) Pipe Producer

• WCL-flagship company of Welspun Group

• largest pipe manufacturing company in the world

• Incorporated in 1995, the Company offers a complete range of high grade line pipes ranging from ½ inch to 100 inch used inter alia for transmission of oil & gas

• along with its subsidiaries-hot rolled steel plates and coils, gas based sponge iron, infrastructure, oil and gas exploration, energy and power generation

• Presence across five business verticals - Pipes, Plates & Coils; Home Textiles; Steel; Infrastructure; and Energy.

Structure Post DemergerWCL – Welspun Corp Ltd WEPL – Welspun Enterprises Ltd

Highlights Of DemergerAim of simplifying Welspun Group’s multiple

businesses

WCL – pipe and plates business

WEPL – steel, infrastructure, oil and gas exploration, energy

no dilution of the existing shareholders’ stake

new entity will be listed on the stock exchange

net debt for Welspun Corp would decline to the tune of Rs 1,100 crore for FY13

Approval of Gujarat High Court

Benefits

Greater flexibility

Adopt independent capital structures

Greater investment choice for shareholders

Closer Alignment

Driving accountability