The board of Bajaj Electricals Ltd (BEL), in a meeting held on May 25, 2021, approved a scheme for “merger by absorption” of Starlite Lighting Ltd, with BEL.
This scheme is subject to various statutory and regulatory approvals, including approval of National Company Law Tribunal (NCLT) and the shareholders/creditors of both companies, Bajaj Electricals said in a stock exchange communication.
Starlite Lighting Ltd (SLL) is an unlisted subsidiary of Bajaj Electricals Ltd. With its registered office at Igatpuri in Nashik district, Maharashtra, SLL is in the business of manufacturing consumer electrical products, such as lighting products (including CFLs and LED lamps) as well as consumer electrical appliances like water heaters, mixers, food processors, juicers, hand blenders, room heaters, fans etc.
SLL is presently an Original Equipment Manufacturer (OEM) vendor for BEL and BEL is the largest customer of products manufactured by SLL. The merger is in line with BEL’s strategic decision to increase in-house manufacturing and reduce dependency on OEM vendors, the communication by Bajaj Electricals said.
Since 2007, BEL has made strategic investments, firstly in the equity share capital of SLL and later in the preference share capital of SLL from time to time. Further, BEL has also provided several long-term and short-term loans, as well as trade advances to SLL over the years. Also, BEL has given corporate guarantees to lenders for loans availed by SLL from its lenders. Accordingly, the merger of SLL with BEL will enable consolidation of business of SLL into BEL for strategic and commercial considerations.
SLL was set up in the year 2000 by Bharati brothers (Ravindra and Arvind). In 2007, Bajaj Electricals Ltd became a “strategic partner” to SLL due to the strategic investments discussed above. In early May 2021, Bajaj Electricals Ltd announced that it had bought the remaining stakes of the original promoters. With the result, SLL became a subsidiary of Bajaj Electricals Ltd. BEL also executed a control transfer agreement with its outgoing promoters.