Meghmani Organics stock is buzzing in trade. It is up 45 percent this month. The company has decided to demerge their Chlor-Alkali business into Meghmani Finechem. To understand the restructuring rationale and outlook, CNBC-TV18 spoke to GS Chahal, CFO of the company.

Chahal said that the restructuring will unlock value for shareholders and give tax benefits.

“We have done capex and in all the three divisions we have growth plans. The Chlor-Alkali division last year clocked Rs 600 crore and we have completed Rs 800 crore capex last year. That benefit is going to come in from this year onwards."

"We have already announced capex of around Rs 700 crore where we are coming with ECH and CPVC which are import substitute products and those are getting completed in next year."

"So, their benefit will start coming from 2022-2023. So we are seeing a lot of growth happening and as a guidance we have given for that business from Rs 600 crore last year, by 2023-2024 we have taken target of Rs 2,000 crore. When it is independently listed, that value unlocking is going to happen through the shareholders,” he said.

Detailing the shareholding pattern, he said, “As far as shareholding is concerned, in case of Meghmani Organics, promoter shareholding is around 50% in the total shareholding and we have a 57% shareholding as MOL in that case. So, 50% of that which is 28.5% will be allocated in the proportion."

"So, against 1000 shares of Meghmani Organics, 90 shares of Meghmani Finechem will be allocated in the same proportion for the shareholders of Meghmani Organics. The shareholding in case of Meghmani Finechem after demerger it will be 70:30; 70% will be with the promoters and rest 30% will be with the public.”

He also said that the consolidated debt stands at Rs 650 crore. He believes that the debt-equity ratio will not cross 0.6 times.

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(Edited by : Bivekananda Biswas)