Move will simplify group structure, says the company
Raymond Ltd. has announced the demerger of its lifestyle business into a separate entity that will be listed through a mirror shareholding structure, the company said on Thursday.
Every shareholder of Raymond Ltd. will be issued shares of the new company in the ratio of 1:1. The move will create a clear demarcation of lifestyle and other businesses leading to the simplification of the group structure, the firm said.
The new company will have the businesses of branded textiles, branded apparel and garmenting while the existing company will retain real estate projects, Thane land bank, B2B shirting business, engineering businesses of auto components and tools and hardware, denim and FMCG businesses.
Ahead of the announcement, the firm’s sharesclosed with a gain of 6.94% at ₹673.70 on the BSE.
Raymond Ltd. also announced the allotment of equity shares and compulsorily convertible preference shares (CCPS) worth ₹225 crore and ₹125 crore respectively to JK Investo Trade (India) Ltd (JKIT), an associate company, against the infusion of net proceeds of JKIT land sale that was announced in October 2019. The allotment was done at ₹674 per equity share.
The total of ₹350 crore will be used to repay debt thus deleveraging the balance sheet of Raymond Ltd. The decisions are subject to approval of the shareholders.
Gautam Hari Singhania, CMD, Raymond Ltd., said, “As we continue to build capacities for enhanced performance and delivery across verticals, demerging the core lifestyle business is an affirmative step towards that direction and this will also simplify the group structure We remain resolute to take right steps to enhance value creation for our shareholders.”
Sanjay Bahl, group chief financial officer, Raymond Ltd., said, “In line with our stated strategy of asset monetisation, the infusion of net proceeds of JKIT land sale in Raymond Ltd. will help us in debt reduction leading to better operational efficiencies.”
“As our balance sheet will get leaner, it will lead to a better profitability at the group level. The demerger of the lifestyle business will enable the demerged company and the resulting companies to have focussed strategy and specialisation for sustained growth and the ability to attract investors for better access to capital,” Mr. Bahl said.
Sanjay Behl, CEO, lifestyle business, Raymond Ltd., said, “With a large network of over 1,500 stores across more than 600 towns and cities, Raymond Lifestyle Business offers an integrated play in the textile, apparel and garmenting segments both in domestic and global markets. With this demerger, lifestyle business will be well positioned to capitalise on the emerging opportunities through newer capabilities across the entire value chain of ‘Fibre to Fashion.’”
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