Corporate Action – Demerger of Chemical Business of Oriental Carbon & Chemicals

Oriental Carbon & Chemicals Limited has unveiled a scheme of arrangement to demerge its “Chemical Business” into its newly incorporated wholly-owned subsidiary - OCCL Limited. The demerged company is a global supplier of chemicals including insoluble sulphur, sulphuric acid, and oleum and generates about two-thirds of its turnover from exports. Additionally, it is in the process of moving its registered office from Kolkata to Gujarat.

The Board of Directors of Oriental Carbon has approved the demerger, which involves transferring the chemical business, responsible for the FY 2021 revenue, to OCCL. Post-demerger, Oriental Carbon will focus on investment activities and plans to venture into commodity trading. To support its investment activities, Oriental Carbon intends to register as a Non-Banking Financial Company with the Reserve Bank of India. The proposed separation aims to facilitate the growth of both businesses, improve access to capital, attract investors, and enhance value based on the distinct risk-return profiles and cash flows of each business.

Upon the scheme becoming effective, shareholders will receive five fully paid-up equity shares of INR 2/- each in OCCL for every one fully paid-up equity share of INR 10/- each in Oriental Carbon. The shares of OCCL will be listed on BSE and NSE, benefiting from regulatory relaxations. Shareholders of Oriental Carbon will thus hold shares in two listed entities, maintaining the same shareholding pattern without dilution. This share swap ratio will increase stock liquidity, benefiting all shareholders by providing opportunities to participate in two distinct businesses poised for future growth.

What do you think about this order by the NCLT? Feel free to use this thread to discuss.

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Hi could you explain it a bit further.
Upon the scheme becoming effective, shareholders will receive five fully paid-up equity shares of INR 2/- each in OCCL for every one fully paid-up equity share of INR 10/- each in Oriental Carbon.
This means a stock split in 1:5. What about the other investment business ? How many shares of the other business will one get for every share of OCCL held ?

@A_B Its not a split, just a demerger of one business from parent company. In the process of demerger. The original shares of the company will remain as is. For instance, if I held 100 shares of Oriental Carbon & Chemicals Limited, ill be getting 500 shares of OCCL (the demerged company has the same name as parent company) and I also hold 100 shares of Oriental Carbon & Chemicals Limited (this will maybe name changed later). However, valuation of both the companies (COA) will be published by the company in a different circular.

This is similar to what Reliance did with Jio. You can check the flow here.

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Hi,
When will shares of OCCL be credited in demat account
Regards

@rahgarg123 The time is not yet committed by the company. However, it takes generally around 7-10 days for the credit of new shares. You can check on the investor relations section of the company website [here] where they publish circulars and notices.

Would someone be able to advise when and where would the valuation report be shared by the Company that was used in the Demerger ? I have not found any valuation analysis on the internet for this demerger , and there are no guidelines to assess the new value of both Rs. 10 shares and the Rs 2 shares in the demerged enity

@Agee_Ogee In the same link as above, you will find all the required information.

Hi,

Finally someone is clearing doubts. This is the first time I am holding demerger company share. My question is I have 55 shares @810 but on 1st july it started trading @200 now it is showing 33k in loss. I know I will get 1:5 share of new company. So how could I understand how much profit I am holding now? If it is 1:5 then curent price of occl is 217*5 is the price of occl ? Also if i sell this current holding am i still eligible for new company share?

That’s my doubt as well. How does the price of the new entity be determined? And shouldn’t the price also impact price of OCCL? Ie. How was 200 as the new price determined.
I guess we’ll find out soon

@Rifzi In such cases, the investment value remains the same. So mathematically, 55 x 810 = 55 x 200 (Price of Parent Company) + 275 x Price of OCCL. So the tentative listing price of OCCL will be approx Rs. 122. Note that, this is simple calculation but share price is dependent on various other factors as well.

Yes as the record date has elapsed and your name has already been registered as eligible share holder, now even if you sell the shares, you will be entitled to get the benefit.

@watteroy On the valuation report submitted to the NCL, ofcouse there are some of the market makers who determine the approx price of the stock post such actions.

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Thank you for the clarifications
Can you please let me know the following

  1. Is the original Company OCCL which is in our Demat account , the company which will continue to do the chemical business
  2. Will the now company that will be listed post demerger be the NBFC / Investment company

Appreciate that u share this much knowledge , any idea how close are we from receiving the due/new shares in our demat act

@Grakesh133 No the parent company will become a NBFC and the Chemical Business company will evolve. Consider this as extraction of OCCL from OCCL (name is same) and then the OCCL (parent) will be an NBFC with possibly a name change. Both will be listed.

@Kushal_Jain For this, need to track the company’s investor page for more details or exchange filings, will try to post any updates on this front in this same thread

Thank u so much sir, from my side I tried to contact the registrar but they are not responding and there is notgh available on Investors page, Kindly help me if possible to know tentative date for listing of new shares

@Kushal_Jain Will update this thread as and when the information will be available

Sir,
I bought 100occl shares at 820 on June 28. Am I eligible??

@Siva_Ranjani Yes, the record date for the action was 1st July 2024. So if you had purchased on 28th June 2024, then the shares would be in your demat account on the T+1 day which is 1st July 2024.

Note that the only miss here could be shortage of delivery. Incase the seller did not fulfil his/her obligation then you might not receive the shares.

Tq sir … But my investment value ? Maybe 80% loss if not allocated?

@Siva_Ranjani No that wont happen, rest assured. If your name was there in the company’s records as on the RD, then you will be entitled to receive the benefit.