On 17th April 2025, HOV Services Limited, a prominent company listed on NSE and BSE, formally announced a strategic corporate restructuring involving the demerger of its wholly owned US-based subsidiary, HOVS LLC, under the laws of the State of Delaware, United States of America. This move is aligned with the company's long-term vision to streamline its investment portfolio, improve flexibility in business operations, and fortify its consolidated corporate structure.

The demerger, referred to as the Plan of Division, was filed on April 17, 2025, and had already received Board approval during a meeting held on February 10, 2025. The company made this disclosure in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and as per the guidelines of SEBI Master Circular dated November 11, 2024.

Details of the Demerger Plan

Under the terms of the plan, HOVS LLC will undergo a demerger, leading to the creation of a new subsidiary entity that will be fully owned by HOV Services Limited. This new entity will exclusively hold the investment assets previously under HOVS LLC, particularly equity securities of Exela Technologies, Inc., which is one of the core holdings of the parent company.

Importantly, there is no turnover attributed to HOVS LLC in the most recent financial year, and thus the demerger has no impact on revenue recognition for HOV Services. However, the move carries significant strategic implications, offering management greater flexibility in handling business opportunities and enabling a more robust and transparent financial structure.

Rationale Behind the Demerger

The key objective of this corporate action is to:

• Segregate the investment assets held by HOVS LLC into a distinct legal entity.

• Retain ownership of remaining assets and liabilities with the existing HOVS LLC.

• Issue shares of the new entity to HOV Services, ensuring continued control and financial alignment.

This restructuring will enhance the transparency of the group’s financial reporting, improve operational clarity, and support future business and investment planning.

Shareholding and Cash Consideration

The demerger does not involve any change in the existing shareholding pattern of HOV Services Limited. Once the Plan comes into effect:

• HOV Services Limited will receive stock certificates representing ownership in the newly formed entity.

• No cash consideration is involved in this transaction.

• The resultant entity will not seek listing, as it will function as an overseas subsidiary.

The newly formed entity will only hold the Exela Technologies equity securities, while HOVS LLC will retain other assets and liabilities. This segmentation is aimed at isolating key investments for better monitoring and strategic deployment in the future.

Future Updates and Regulatory Compliance

HOV Services has assured that it will continue updating the stock exchanges—the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange (BSE)—on further developments related to this demerger. The company remains committed to maintaining full transparency with its shareholders and regulatory bodies, adhering strictly to the Listing Regulations.

The disclosure, as per Annexure A, has also highlighted that the action is in complete accordance with the SEBI (LODR) Regulations, 2015 and the SEBI Master Circular dated November 11, 2024.

Strategic Significance

In today’s corporate environment, businesses are increasingly required to adapt their structures to evolving market demands. HOV Services’ latest move exemplifies this shift toward leaner and more agile organizational frameworks. By creating a separate legal entity to manage its investment portfolio, the company:

• Mitigates risk exposure by separating operating and investment entities.

• Increases operational focus within each business unit.

• Unlocks new avenues for capital infusion or partnerships, specific to the investment assets.

Moreover, this move can potentially simplify tax planning, enhance investor confidence, and pave the way for potential monetization or revaluation of assets under the newly formed entity.

Closing Thoughts

The demerger of HOVS LLC is a strategic restructuring initiative designed to align HOV Services Limited’s operations with its long-term financial objectives. With no impact on revenue or shareholding structure, and a focus on investment segregation, the company is clearly prioritizing agility and transparency in its business model.

As HOV Services continues to execute its multi-phase demerger strategy, market watchers and investors will keep a close eye on subsequent developments, particularly regarding how the new entity’s asset management strategy unfolds and how it adds value to the consolidated financial performance of the group.

Through this disclosure, HOV Services Limited reaffirms its commitment to corporate governance, regulatory compliance, and strategic growth.

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