THE TIMES OF INDIA, KOLKATAFRIDAY, MAY 19, 201718 TIMES BUSINESS

Kolkata: The RP-Sanjiv Goen-ka Group on Thursday announ-ced a four-way split of its flags-hip company CESC Ltd to crea-te two separate entities for po-

wer distribution and genera-tion; one for retail; and the otherfor the remaining businesses.

Announcing the decisionthat had been reported onThursday’s edition of TOI, gro-up chairman Sanjiv Goenka sa-id the mirror image demerger

was aimed at unlocking valueand provide better focus intomanagement of each businessvertical. “We hope to list thenew companies by October 1,2017, after getting the necessaryapproval from statutory bodieslike the National Company LawTribunal,” Goenka said.

The power distribution bu-siness in Kolkata, Noida, Bika-ner, Kota and Bharatpur will beunder CESC Ltd, the generationplants with an aggregate capa-city of 2,550 MW will be underCESC Generation. Spencer’swill be the name of the retailcompany that currently hasaround 120 stores, including 37hypermarts in 35 cities. The fo-urth firm, CESC Ventures, willinclude all other businesses, in-cluding the BPO Firstsoruce,FMCG, retail and sports.

The move will see the share-holding capital increase fromRs 132 crore to Rs 198 crore as Rs

66 crore worth shares are issuedto existing shareholders as partof the restructuring plan. Theresultant shareholding patternfollowing demerger will be Rs 66crore each for CESC Ltd andCESC Generation; Rs 40 crorefor Spencer’s and Rs 26 crore forCESC Ventures.

For each 10 shares of CESCLtd, a shareholder will get fiveshares of Rs 10 each in genera-tion and distribution, two sha-res in CESC Ventures and sixshares of face value Rs 5 each inSpencer’s. “We cannot techni-cally term it a bonus but for sha-reholders, it will be something

similar,” the chairman said.On the future outlook, Goen-

ka said CESC Ltd would aggres-sively pursue opportunities incities across the country and ho-ped to bag distribution opportu-nities in at least two more statesin the next 12 months. “We willgrow in generation but thegrowth will be more aggressivein distribution,” he remarked.CESC now has distributionrights in parts of Bengal, UttarPradesh and Rajasthan.

On Spencer’s, Goenka saidthe growth focus would be inthree cities — Kolkata, NationalCapital Region (NCR) and Pune.At present, there are around 80stores in these three locations.Goenka also claimed the recent-ly spruced up apparel businesswithin Spencer’s was reapingdividends with sales in 2017-18pegged to cross Rs 100 crore.

Prior to the demerger anno-uncement, CESC said that it hasrecorded a net profit of Rs 824crore in 2016-17, up from Rs 812crore registered last fiscal. Inthe fourth quarter, profit was upfrom Rs 277 crore to Rs 281crore.

Shareholding Capital UpFrom ̀̀ 132 cr To ̀̀ 198 Cr

CESC splits to form 4 firms

SPREADING WINGS: Goenka

Shriya Patil

PRO

Kolkata/Mumbai: In amajor

overhaul, the RP-Sanjiv Goen-

ka Group is set to unveil a

four-way split of CESC, the

conglomerate’s holding compa-

ny. Goenka plans to demerge

CESC into stand-alone listed en-

tities focused on four business

verticals — retail, BPO, power

generation & transmission and

power distribution. Industry

players said this de-consolida-

tion is aimed at unlocking bet-

ter value for distinct businesses

that suffer currently from

‘conglomerate discount’ (the lo-

wer valuation that companies

from different industries toget-

her get under a single entity

than when they are listed sepa-t is

re are indications that the Kol-

kata-based group’s real estate

business may not be part of the

retail firm. “It is likely to be

part of either of the power

companies,” a source from the

industry circle said. The gro-G ka

Rs 16,000 crore now. “In the

next five years, the focus of the

group would be on bottom line

where this restructuring wo-

uld come in handy,” added

another source.

Currently, in the group’s to-

talrevenue,CESC had a consoli-

Indian music, had a revenue of

Rs 214 crore last fiscal while

Harrisons Malayalam, also a

listed entity, reported a turno-

ver of close to Rs 300 crore.

The group has presence in

power, engineering, education,

entertainment, IT, retail,

FMCG, plantations and foods.

“This was a long-pending rest-

ructuring to unlock value of the

group flagship, CESC. Altho-

ugh it is predominantly a power

utility, but except for a few com-

panies within the group, most of

the businesses are under

CESC,” a source added. Cur-

rently, the power utility has 35

subsidiaries and associate com-

panies across sectors which in-

clude power, retail, foods, real

estate and BPO. Besides, in the

era of unbundling of power ut-

ilities, CESC is among the very

few power utilities in the count-

ry which has generation, trans-i

Move Part Of Major Overhaul Aimed At Unlocking Value

RP-Sanjiv Goenka holding

co CESC to split four ways

The RP-Sanjiv

Goenka Group

is expected to

split holding

firm CESC into

power distribution,

power generation &

transmission, retail and BPO

In FY16, CESC had a

consolidated revenue of

`12,118cr, including retail,

BPO, power and some

other businesses

It has 35 subsidiaries

and associate cos,

while the combined

group revenue is

over `16,000cr

Besides CESC,

other listed firms of

the group are Phillips

Carbon Black, Saregama,

First Source Solutions and

Harrisons Malayalam

Both First Source Solutions’

holding co Spen Liq as well

as the group’s retail arm

Spencer’s will be listed

4 COS TO BE

LISTEDUdit Prasanna Mukherji &

Partha Sinha TNN

Bfuiotc

A

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YOU READ IT HERE FIRST

The Times of India dated May 18, 2017

TIMES NEWS NETWORK

It would also not help usachieve a leadership posi-tion or compelling, long-

term profitability in the do-mestic market. Difficult as ithas been to reach this deci-sion, it is the right outcome tosupport our global strategyand deliver appropriate re-turns for shareholders,” Jaco-by added.

GM India has around 6,000employees and managementsaid around 400 of these, orabout 8%, will be laid off grad-ually. Around 2,500 employeesare posted at its global R&Dcentre at Bangalore and anequal number is employed inTalegaon plant.

Ironically, GM’s exit fromIndia comes at a time whensome of the other global carcompanies such as Korea’sKia, China’s SAIC and Franc-e’s Peugeot are rushing in onexpectations of healthy salespotential. India is the world’sfifth largest passenger vehiclemarket and is forecasted to bethe third-biggest by 2020, be-hind China and the US.

The exit from India comesmonths after GM moving outof Europe by selling its car op-

erations to France’s Peugeot.Sources said Peugeot may alsotake control of GM’s Talegaonplant and the US carmakermay source vehicles for ex-ports through a contract man-ufacturing arrangement. Thecompany is already in negotia-tions with its Chinese partnerSAIC for sale of Halol facility,though a deal is not reacheddue to nagging labour issuesand pending clearances fromthe Gujarat government.

GM India’s business ap-peared to have stabilised

around 2011-12 when its salescrossed over a lakh units. How-ever, its fortunes started dwin-dling due to a series of contro-versies over an emission scan-dal where a government panelaccused the company of en-gaging in “corporate fraud” intesting of its engines.

The company recalledlakhs of vehicles and followedit up with a poor product strat-egy by making relatively low-quality cars with Chinesepartner SAIC. Surprisingly,GM’s global CEO Mary Barrasaid around two years backthat growth in India was a pre-requisite to remain strong

globally. “It is difficult, but wewill have to win the trust ofcustomers. India is a strategicmarket and a key to our suc-cess globally... GM cannot re-main a global leader withoutmaking a serious investmenttowards expanding our pres-ence in growth markets like In-dia," Barra had told TOI in Ju-ly 2015.

Coupled with a poor localmanagement and inconsisten-cy at the top leadership, thecompany’s volumes startedslipping rapidly and closed theprevious fiscal (2016-17) with26,000 units compared to1,10,050 in 2011-12. Its dealer net-work had been reduced to 150from 240. Old-timers and pastemployees of the companyblamed “poor planning” and“very poor strategizing” forGM India’s failure. GM, how-ever, said the exit is in line withglobal strategies.

GM, which said a categori-cal “no” to any immediate re-turn to the Indian market, saidthe exit decision is an impor-tant milestone in strengthen-ing the performance of its international operations and“establishing GM as a more focused and disciplined company.”

8% of GM India’s 6k staff to go�Continued from P 17

GRADUAL STEP

Sidhartha@timesgroup.com

When the GST reg-istration window opens on June 1, Molu Ram, a

Mother Dairy milk vend op-erator, may be among those who seek registration. Like the ex-serviceman, there will be a few thousand oth-er Safal and Mother Dairy booth operators who need to register.

“Most of our products such as fruits, vegetables and milk will be exempted from GST but all our booths will have to be fully compli-ant since some products like ice cream and edible oil will be in the net,” said Mother Dairy CFO Meghnad Mitra.

Clearly, most booth opera-tors, a large part being ex-ser-vicemen, are not in a position to comply with the electronic registration and filing re-quirements that will come with GST. So, Mother Dairy is creating a panel of 5-6 consultants to help them. But GST compliance will come at a cost – between Rs 1,500 and Rs 2,000 each – with the company yet to decide who will foot the bill.

Luckily for Mother Dairy, a bulk of the registration requirement will be limited to Delhi, Haryana and Ut-tar Pradesh since its booths operate in the National Capital Region. For the railways, the registration requirement will be in every state since its stations sell tickets to passengers and transport goods.

Individual railway zones will also have to register in each state through which their trains pass. If Northern Railways runs a train from, say, Delhi to Mumbai, it will need registration in Ma-

harashtra, Gujarat, Rajasthan, Madhya Pradesh, Haryana, Uttar Pradesh as well as Delhi since it will sell tickets in each state, ex-plained tax lawyer RS Sharma.

The same will apply to a bus that runs from Delhi to Jammu,

boarding passengers in Delhi, Karnal and Chandigarh, and also from Jammu on the return journey. “If there is cen-tralised ticketing there is no need for separate registration in each state,” ex-plained an officer.

For the bus operator there is the ad-ditional complication of getting a tax credit from the Jammu & Kashmir gov-ernment, which is yet to enact a GST law.

For goods transporters with a na-tional permit, even if they pick up goods from multiple states so long as the billing is from a centralised location the registration requirement will not extend to more than one state.

But banks, insurance companies and other service providers with mul-tiple points of sale and billing centres will have to register separately in every

state. Although the Centre was keen on centralised registration to ensure the promised ease of doing business under the GST regime, states have insisted on diluting the norms and making regis-tration mandatory with them.

Banks, telecom companies and oth-er financial services companies had petitioned the GST Council to allow for centralised registration but states had their way.

With the registration requirement comes the compliance burden too. “If there is a dispute with a state govern-ment, you will need to have people there to deal with the case,” said a company executive.

Consultants said they are facing practical problems. For instance, cur-rently there is no provision to change the name of the authorised signatory of the company. “What if the employee who is the authorised signatory leaves between the time you register and GST kicks in?” said a tax consultant.

Part 5 on Tuesday

States complicate GST rollout with registration requirement

ROAD TO

GST-4

REGISTER HERE

REGISTER HERE

REGISTER HERE

Businesses with multiple points of sale and billing, such as banks, will have to register separately for GST in every state where they operate

Company representatives will have to be appointed to deal with disputeswith state governments

Companies cannot change their authorised signatories;what will happen if a state-level representative quits?

Gothenburg, Sweden: Swed-ish luxury car maker Volvo Carswill start local assembly of its ve-hicles in India, under strategicalliance with former group enti-ty Volvo Group India whichmakes trucks and buses from itsplant in Bengaluru. Volvo Carswas earlier part of Volvo Group,globally, before being sold off toFord in 1999 and later to Chinesecompany Geely in 2010.

The company is planning touse Volvo Group India’s truckand bus plant in Bengaluru, un-der contract manufacturing ar-rangement, to start assemblingits XC90 in India. The first local-ly assembled XC90s should rollout of the Bengaluru factory bythe end of this year, said top com-pany officials. “Our target is todouble our sales in India in thenext 2-3 years and also doubleour market share in India. Rightnow we sell around 1500-odd carsand we want to take that to 3000units,” said Håkan Samuelsson,global president and chief exec-utive of Volvo Cars.

Volvo toassemble carsin Bengaluru

Nandini.Sengupta@timesgroup.com

Sharma said, “We will ag-gressively move in areassuch as lending and finan-

cial products, among others, aswe aim to offer financial inclu-sion to half a billion people. Wehave already partnered withbanks and startups in thisspace along with the launch ofpayments bank next week.”

Paytm will look to invest$1.6 billion over the next three-five years as it targets gettingon board 500 million custom-

ers, more than doubling thecurrent 220 million which itclaims as its user base. Newbusinesses like online com-merce, movie ticketing, traveland hotels will get a significantshare of the fresh capital, Shar-ma said.

Paytm, with the backing ofSoftBank, gets an edge over oth-er local internet players as itwill be able to fight bigger rivalsin the e-commerce universeand expand its payments busi-ness. The company appointedRenu Satti as the new CEO of

its payments bank and expectsto start operations from May 23after multiple delays. A signifi-cant chunk of the new funds isexpected to be allocated to thepayments business as well.

Investors like SoftBank arebetting big on Paytm as they ex-pect to re-write the Alipay suc-cess story in China here in In-dia. Alipay, run by Ant Finan-cials, which is an affiliate ofAlibaba, and a large sharehol-der in Paytm, was last valued at$60 billion and is likely to go foran IPO soon.

Paytm: New businesses to get fresh capital�Continued from P 17 SLICE OF THE PIE

Alibaba Group

Saif Partners

SoftBank

V S Sharma

Employees

Mediatek

Paytm Parent One97 Communications Shareholding Pattern (%)

40

3 1

20

20

16