Blue Star plans to transfer its Professional Electronics and Industrial Systems Business to subsidiary

For over six decades, the Professional Electronics and Industrial Systems business has been the exclusive distributor in India for many internationally renowned manufacturers of hi-tech professional electronic equipment and services, as well as industrial products and systems. Over the years, the Company has changed its business model from merely being a distributor to that of a system integrator and value-added re-seller, thereby moving up the value chain. The Company has carved out profitable niches for itself in most of the specialised markets it operates in, such as Industrial Products and Systems, Material Testing Equipment and Systems (Destructive/Non-Destructive), Data Communication Products & Services, Testing and Measuring Instruments and Healthcare Systems.

With the expected revival of the economy, most of the segments targeted by this business are planning to increase their capex investments which will result in significant growth in demand. Further, the Company has been selling Blue Star branded products in some of the segments and this initiative has met with encouraging response. Since this business segment is distinctly different from the main AC&R businesses of the Company, it needs an independent identity along with specialised resources in order to exploit its full potential.

Keeping the above strategic imperatives in mind, the Board of Directors, in its meeting held on January 21, 2015 approved, subject to receipt of all statutory and regulatory approvals, the transfer of the Professional Electronics & Industrial Systems undertaking of the Company to Blue Star Electro-Mechanical Limited (BSEML), a wholly owned subsidiary of the Company, before the end of this Financial Year on a "going concern" basis at fair value estimated at about Rs 110.50 crores determined by an independent valuer. BSEML will discharge the consideration for the said transfer by issue and allotment of fully paid up equity shares to the Company. The Company intends to stay invested for a long term and grow this business. Further, BSEML will be suitably renamed to reflect the nature of its business.

The leadership and management structure of Blue Star Electro-Mechanical Limited will be strengthened, and the Company is confident that this step will provide the necessary growth impetus for Professional Electronics and Industrial Systems business in order to capitalise on the impending opportunities.

Shares of BLUE STAR LTD. was last trading in BSE at Rs.319.75 as compared to the previous close of Rs. 325.1. The total number of shares traded during the day was 4773 in over 575 trades.

The stock hit an intraday high of Rs. 325 and intraday low of 318. The net turnover during the day was Rs. 1533174.

Source : Equity Bulls

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