Tata Power on Thursday said it has got shareholders' approval to modify a scheme of arrangement to keep Tata Power Solar Systems Ltd (TPSSL) as an independent entity, contrary to its prior plan to merge it with itself.
Tata Power had given a postal ballot notice to amend the amalgamation scheme to keep the TPSSL as a separate entity and let it continue as a wholly-owned subsidiary, rather than merging it with the firm as envisaged under the composite scheme.
The resolution has been passed by the members of the firm with requisite majority on Thursday -- the last date of voting, it said in a BSE filing.
The remote e-voting period had commenced on November 3, 2021.
The firm explained that in recent months, there have been numerous favourable policies of the government to promote and encourage entities engaged in solar manufacturing, consisting of production linked incentive scheme to make high-
efficiency solar PV modules, and the imposition of basic customs duty on the import of solar cells/modules.
Accordingly, the government policies will assist TPSSL further expand its existing manufacturing capacities and create more shareholder value.
Consequently, it was felt that it would be commercially prudent and desirable to keep TPSSL as a separate entity rather than merging it with the company as envisaged under the Composite Scheme.
The board and the transferor firms, at their respective meetings held on July 1, 2021, had decided to amend the Composite Scheme and withdraw the amalgamation of TPSSL with the company.
The amended Composite Scheme (post exclusion of TPSSL) will now comprise the amalgamation of CGPL (Coastal Gujarat Power Ltd) with the firm and consequential capital reorganisation.
Further, under the amended Composite Scheme, no consideration will be discharged, either in the form of shares or otherwise, by the company to CGPL, being a wholly-owned subsidiary.
Thus, it stated that there is no valuation exercise to be undertaken in relation to the amended Composite Scheme and there will also be no need for obtaining a fairness opinion.
As per the amended Composite Scheme, the rights of equity shareholders will not be adversely impacted as even currently, the financial accounts of CGPL and TPSSL (being wholly-owned subsidiaries) are consolidated with the company.
The board of Tata Power had on August 12, 2020 approved the Composite Scheme of Arrangement amid CGPL, TPSSL and Tata Power Company and their respective shareholders.
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