This will create two separate companies—the new one housing 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.
The listing will be done in the mirror shareholding structure which means “every shareholder of Raymond Ltd. will be issued the shares of the new company in the ratio of 1:1,” said a statement from the company.
In a separate development, the company announced 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 company will raise Rs 225 crore via the allotment of 3.3 million equity shares while Rs 125 crore will be raised via the allotment of 1.8 million CCPS. Both will be issued at Rs 674 per share.
The fund will be used to repay Raymond’s debt.
The company last month said it sold 20-acres of land to global investment firm Xander-backed Virtuous Retail South Asia (VRSA) for Rs 700 crore. This is part of the 125 acre land bank it owns in Thane. It has been looking at ways to sell the land.
Raymond last year made an entry into the real estate business with plans to develop a residential project.
Chairman Gautam Singhania said the demerger will “simplify the group structure”.
“In line with our stated strategy of asset monetization, the infusion of net proceeds of JKIT land sale in Raymond Limited 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 and the resulting companies to have focused strategy and specialization for sustained growth and the ability to attract investors for better access to capital,” he added.