Power Evacuation Business Demerged: Inox Green and Inox Renewable to Become Two Focused Entities

Power Evacuation Business Demerged: Inox Green and Inox Renewable to Become Two Focused Entities​

The demerger of a major business vertical is set to transform the structure of Inox Green Energy Services Limited (IGESL) and Inox Renewable Solutions Limited (IRSL). The company formed the Scheme of Arrangement, which proposes separating the Power Evacuation Business from IGESL and transferring it to IRSL. The proposed arrangement seeks to establish two distinct listed entities with specialized operational focuses.

The transfer of the Power Evacuation Business—the "Demerged Undertaking"—will become effective from the appointed date of October 1, 2024.

Strategic Rationale for the Demerger​

The rationale behind the demerger centers on achieving enhanced focus and unlocking value within the renewable energy sector. Currently, IGESL is engaged in both the Operations and Maintenance (O&M) services for wind turbine generators (WTGs) and the Power Evacuation Business.

The Scheme aims to:

• Enhance Focus: Establish IGESL as a pure-play O&M service provider.
• Consolidate Business: Enable the consolidation of the Power Evacuation Business within IRSL, leading to a single entity with enhanced focus on this specific domain.
• Unleash Value: The structural split is intended to allow both resulting entities to pursue independent strategies, thereby generating higher growth potential for all stakeholders.

The outcome will result in two separate listed entities: one dedicated to O&M services, and the other carrying the EPC and Power Evacuation business.

Deal Mechanics and Consideration​

The demerger is governed by a specific share and warrant entitlement ratio. The valuation report, which formed the basis of the scheme, provided the following exchange ratios for stakeholders:

Procedural Status​

The Scheme of Arrangement, which involves the demerger, has been sanctioned by the National Company Law Tribunal (NCLT). The Tribunal noted that the process involved comprehensive approvals from multiple classes of stakeholders, including equity shareholders, warrant holders, secured creditors, and unsecured creditors of both petitioner companies.

The sanctioning order directed the petitioner companies to ensure the following compliance measures:

1. The Power Evacuation Business of IGESL shall transfer and vest in IRSL.
2. All associated assets, liabilities, rights, and obligations pertaining to the demerged business must transfer to IRSL.
3. The resulting company (IRSL) must issue and allot shares and warrants to the shareholders and warrant holders of IGESL according to the established ratios.
4. The petitioner companies must ensure compliance with all applicable statutory provisions, including those related to stamp duty, GST, and corporate regulations.

INOXGREEN Stock Price Movement​

Today, Inox Green Energy Services Limited shares slipped by 0.66% to settle at ₹179.92. The stock traded on a volume of 1.28 million shares, concluding the session below its day's range of ₹177.26 to ₹184.19.