ABB India on Wednesday said its board has decided to incorporate a wholly-owned subsidiary to which it will sell its turbocharger business for Rs 310 crore.
In June 2021, ABB India had informed bourses regarding its proposal to divest/sell its turbocharger business in the Process Automation business segment.
A regulatory filing stated, "In the meeting of the Board of Directors held yesterday, i.e., December 21, 2021, the Board considered and approved the incorporation of a wholly-owned subsidiary and sale of the company’s turbocharger business as a going concern, on a slump sale basis to its wholly-owned subsidiary for a consideration of Rs 310 crores".
The company also informed that the slump sale will be consummated by February-end 2022, and the name of the subsidiary will be updated in due course.
The new entity to be incorporated will be a subsidiary of the company, a subsidiary of promoter ABB Asea Brown Boveri Ltd. However, the company’s promoters will not hold any shares in the subsidiary, it said.
Upon completion of the slump sale, the wholly-owned subsidiary that is being incorporated will be engaged in the turbocharger business, it added.
The turbocharger business has a turnover of Rs 187 crore, which is approximately 3 per cent of the total turnover of the company, for the financial year ending December 31, 2020.
The contribution of the turbocharger business to the net worth of the company for the financial year ending December 31, 2020, is less than Rs 25 crore.
It is not acquiring an existing entity but is incorporating a wholly-owned subsidiary. The company does not envisage any governmental or regulatory approvals to be required for the incorporation of the wholly-owned subsidiary, other than regular approvals required under the law, according to the filing.
The business transfer agreement will be executed following incorporation of the wholly-owned subsidiary, it added.
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