Gujarat Gas has announced a significant scheme of arrangement.
- It involves reverse merger of Gujarat State Petroleum Corporation (GSPC, unlisted), GSPC Energy (GEL, unlisted), and Gujarat State Petronet (GSPL, listed) into Gujarat Gas (GGL, listed).
- Additionally, GGL’s gas transmission business will be carved out and listed separately as GSPL Transmission Limited (GTL) on the stock exchanges.
Existing and resultant shareholding structure
Existing
Resultant
Reasons for the scheme provided by the Company are mentioned above.
What’s the opinion of analysts about the scheme?
Most analysts are positive about the scheme due to the following reasons –
- GGL will get benefit from the Rs 7,200 cr carry-forward losses lying with GSPC
- trading margin being charged by GSPC from Gujarat Gas will now be valued at a higher multiple (as it will now come in the books of GGL itself)
- elimination of the holding company discount
One significant negative highlighted by some brokerages include – increase in the earnings volatility of GGL, which may translate into a structurally lower valuation multiple for GGL.