Khaitan & Co Advises RR Kabel on Slump Sale of U M Cables

RR Kabel Acquires U M Cables’ Optical Fibre Business

Khaitan & Co advised RR Kabel Limited on its acquisition of the optical fibre and related cables business from U M Cables Limited, a wholly owned subsidiary of Usha Martin Limited, through a slump sale. The transaction involved transfer of undertakings without separate valuation of individual assets, a structure commonly used for seamless business transfers under corporate restructuring.

The legal team, led by Partners Bhavik Narsana and Kinshuk Jhunjhunwala, with Senior Associate Ipshita Dey and Associate Kamayani Mittal, provided end-to-end support across corporate, tax, and regulatory aspects. Vinita Krishnan, Executive Director (Direct Tax), advised on tax structuring and compliance under Sections 2(44) and 50CA of the Income Tax Act, which govern slump sales and valuation.

Key Legal and Tax Considerations

Slump sales offer tax efficiency when the entire business is transferred as a going concern, avoiding piecemeal stamp duty and transaction taxes. The structuring must satisfy Section 2(42C) of the Income Tax Act to qualify for lump-sum consideration treatment. The deal illustrates growing consolidation in India’s cable and infrastructure sector, where legal advisory plays a critical role in ensuring compliance with tax, corporate, and competition norms.