Mumbai-based textile and fashion conglomerate Raymond Ltd. has announced the demerger of its lifestyle business into a separate entity that will be listed on stock exchanges, the company said.
This will create two separate companies – the new one will have the core branded textile, branded apparel and garmenting businesses and the existing one to have its new real estate project, land bank, engineering businesses of auto components and FMCG businesses among others.
According to the company, every shareholder of Raymond Ltd. will be given shares of the new company in the ratio of 1:1, and this move will create a clear demarcation of lifestyle and other businesses leading to simplification of the structure of the group.
Chairman Gautam Singhania said the demerger will ‘simplify the group structure’. “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,” said group Chief Financial Officer Sanjay Bahl.
“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 & the resulting companies to have focused strategy and specialisation for sustained growth and the ability to attract investors for better access to capital,” he added.
Another announcement by the company said that it is raising Rs. 350 crore by allotting equity shares and compulsorily convertible preference shares (CCPS) to an associate company JKIT, against the infusion of net proceeds of JKIT land sale that was announced in October 2019.
The firm will raise an amount of Rs. 224 crore through the allotment of 3.3 million equity shares while Rs. 125 crore will be raised via the allotment of 1.8 million CCPS and both will be issued at Rs. 674 per share.
The infusion of net proceeds of JKIT land sale in Raymond Ltd. will help the company in debt reduction which stands at Rs. 2,777 crore presently.