SynopsisHEG shares opened nearly 64% lower on Monday as the stock adjusted for the company’s demerger, which split its businesses into two separately listed entities. The graphite electrodes business will move to HEG Graphite, while the existing listed company will retain advanced materials, battery energy solutions and green power businesses and be renamed HEG Advanced Materials.

comHEG shares opened nearly 64% lower on Monday as the stock adjusted for the company’s demerger. Shares of HEG appeared to have fallen nearly 64% on Monday, but the sharp drop was largely a price adjustment following the company’s demerger into two separately listed entities focused on graphite electrodes and advanced materials.

25 apiece on Friday, HEG shares opened around 64% lower at Rs 260 apiece on Monday as it adjusted to the demerger on the record date. The stock now trades excluding the value of the graphite electrodes business.

The company currently has a market capitalisation of around Rs 5,095 crore. Earlier last month, HEG fixed September 7 as the record date to determine which shareholders will be eligible for its demerger.

The graphite electrodes business will move to HEG Graphite, which is proposed to be later renamed to HEG and run as a pure-play graphite electrodes company. The existing listed company will retain the advanced materials, battery energy solutions and green power businesses.

It is proposed to be renamed HEG Advanced Materials after the demerger. What does this mean for HEG shareholders?

As part of the demerger, HEG shareholders will receive one share with a face value of Rs 2 each in the company being spun off for every share they hold in the existing HEG. This means the demerger ratio has been fixed at 1:1.

For example, an investor who holds 10 shares of HEG as on the record date will, after the demerger takes effect, hold 10 shares of HEG and 10 shares of HEG Advanced Materials. Only shareholders who hold HEG shares in their demat accounts as on the record date will be eligible to receive shares in the new company as part of the demerger.

As part of the same scheme, Bhilwara Energy will be amalgamated into HEG. Under the arrangement, HEG will issue eight equity shares with a face value of Rs 2 each for every seven equity shares with a face value of Rs 10 each held in Bhilwara Energy.

It is important to note that Bhilwara Energy is an unlisted company.. Ravi Jhunjhunwala will continue to lead HEG Graphite as Chairman, Managing Director and Chief Executive Officer.