Retail company to merge with CESC

Kolkata, Apr 17(UNI) In a move towards creating multiple revenue streams and building up a big corporation, the CESC Board today approved merger of Pathik Retail Limited, the holding company of Spencer's Retail, with the power utility.

CESC, which already has holding over 'CESCS Properties Limited', an independent entity under the company, will own in the process of the proposed merger 94 per cent equity of Spencer's Retail, the wholly owned subsidiary company.

The move will push up the promoters's share in CESC from the present 40 per cent.

" We are looking at building up a big corporation with three independent entitites, de-risked from each other. Keeping that in mind, the Board has approved merger of Pathik Retail Limited with effect from April one. While power will be the mainstay of CESC's operation, retail and real estate business come next", Vice-Chairman Sanjiv Goenka told reporters after the Board meeting.

He said KPMG had prepared the enterprise valuation of CESC and fixed it at 2.57 times of Spencer's retail equity. Pathik Retail, the holding company has a paid up capital of Rs. 61.5 crore with a swap ratio of 1.98:1.

Observing that retail business was growing very fast at a rate of 12-14 per cent per month, Mr. Goenka said CESC would invest between Rs 1,000 crore and 1,200 crore in the sector over the next three years.

The move envisaged expansion of Spencer's network to 2,000 stores allover the country by 2009-10 from the present strength of 135 stores.

" In the next six months to one year, we are going for capital raising through debt-equity combination. The growth in retail business will have a very good effect on shareholders," he said.

Mr Goenka claimed that any setback in the performance of either retail or real estate would have no impact on the CESC balance sheet as both would continue to function as independent entitites. But dividends earned by them would flow into the CESC coffers.

UNI