The board of directors of ABB approved the demerger of its power generation (Powerco) business in principle and also the scheme of arrangement involving the terms and conditions of the same, an ABB statement said here.

The scheme would become effective on the last date of receipt of all approvals including sanctions or orders from bombay high court, obtained, passed and filed, the statement said.

After the scheme takes effect, in consideration of the demerger and transfer of the business in favour of Powerco, the new company would issue and allot one equity share of the Powerco of the face value of Rs 10 each for every one equity of face value of Rs 10 each held by the shareholders of ABB.

The shares to be issued and alloted by the Powerco would be listed on the stock exchanges, the statement said.

Appointment date for thisarrangement is April 1, 1999, the statement said, adding Powerco would engage from the effective date, all permanent employees of ABB who are directly or indirectly employed in relation to the power generation business.

The statement said from the date of appointment and up to the effective date, ABB would carry on the business of Powerco as trustees.

In considering the scheme of arrangement, the board of directors have also taken into account the interests of all its shareholders by ensuring they also become shareholders of the Powerco, the statement said.

The multinational engineering giant has made its presence in the country by taking up equity participation in various power projects including that of public sector undertakings.

Abb's operations in India primarily covers four business segments -- power transmission, power distribution, automation and products and contracting.

The company has equity participation in power projects like the 500mw Daewoo power project in Madhya Pradesh and the1025mw Videocon power project in Tamil Nadu.

ABB has been selected as the joint venture partner for the National Thermal Power Corporation's (Ntpc's) Renovation and Modernisation (R&M) Company.

The multinational major has also bid for the engineering, procurement and construction (EPC) contract worth Rs 3,000 crore for NTPC's gas-based power plants in Gujarat.