Solectron to demerge electronic mnfg division

New Delhi, Nov 6 (UNI) Solectron Centum Electronics Ltd (SCE) will demerge its electronic manufacturing services (EMS) division into a new company, under its overall business reorganisation plan.

The demerger, which is subject to statutory and regulatory approvals, of the EMS division into Solectron EMS India Ltd (SEIL), would be necessary to achieve effective and focused management, greater financial strength and flexibility, in the interest of maximising overall shareholder value.

Such reorganisation would be in the interests of all stakeholders, the company said in a statement.

The EMS and components divisions have different business models and Solectron believes the demerger is critical to enable a more effective focusing of management and other resources on the unique requirements of each business, Solectron Corporation Chairman and Senior VP said.

''This demerger will help bring better focus to the business and I am very excited about the various options for growth this demerger brings to the two business,'' said Apparao Mallavarapu Managing Director of the company.

The demerger would be tax neutral in the hands of the shareholders and the companies. The company also proposed to list the shares of SEIL in all the stock exchanges where its shares are listed.

The share capital of the company as on October 1, 2006, stood at Rs 14.80 crore and its 74 lakh shares will be cancelled under the proposed scheme. Post demerger, the fully diluted equity capital of the SCE will be Rs 7.40 crore and the equity capital of SEIL shall be at an identical Rs 7.40 crore.

Both the components and EMS businesses carried on by the company have significant potential for growth, and each business or undertaking is capable of attracting a different set of investors, customers, strategic partners, lenders and other stakeholders. Each of these two businesses requires independent focus and management so as to unlock their respective values and potential to all the stakeholders, the SCE said.

SCE is a subsidiary of US-based Solectron Corporation. It is engaged in the business of manufacturing of high end electronic components and electronic manufacturing services.

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