Shares of Forbes and Company hit upper circuit as the board approves demerger

The board of the company has approved its demerger into Forbes Precision Tools and Machine Parts Limited 

Forbes & Company, a Shapoorji Pallonji Group company informed in a press release on September 26, that its board of directors at their Board Meeting held on September 26, 2022, have approved the Scheme of Arrangement between the company and Forbes Precision Tools and Machine Parts Limited (FPTL, the Resulting Company ) and their respective shareholders. The scheme is however subject to necessary approvals 4 fully paid up equity shares of Rs 10 each of the FPTL shall be issued and allotted to the equity shareholders of the Demerged Company (FCL)for every 1 fully paid up equity shares of Rs 10 each held by them in the Demerged Company as on the Record Date.  

Forbes & Company Ltd has three main businesses; namely engineering, shipping and logistics and business automation. The company manufactures precision tools and offers energy solutions. Forbes offers cutting tools under the brand name ‘Totem’. 

Upon demerger, the resultant company FPTL will undertake the business activity of manufacturing & trading cutting tools, HSS Taps, HPT, Rotary Burrs, HSS Drills, CST Dies, Spring Washer, Threading Tools and Carbide Tools. 

Of the total turnover of the existing company, the precision tools business constituted 76.25% of the total business. For the year ended March 31, 2022, the turnover of the Demerged Undertaking namely Precision Tools Business was Rs 179.22 crore. 

The demerger is sought to enable the demerged company and the resulting company to focus and enhance their respective businesses by streamlining operations and its management structure ensuring better and more efficient management control while giving an opportunity to the resulting entity to gain a sharper strategic focus on the business segment under a separate entity. 

The shares of FCL were locked in the upper circuit at Rs 694.90 after the news of the demerger came in. Investors should keep an eye on this stock in the upcoming session for more action.