RDB Industries hives off cigarette biz, to focus on realty

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RDB Industries hives off cigarette biz, to focus on realty

RDB Industries is looking to sell its cigarette business. The demerger has been approved by the board and is in process since June 1. CNBC-TV18’s Nimesh Shah joins us with details

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RDB Industries is looking to sell its cigarette business. CNBC-TV18's Nimesh Shah reports.

Below is a verbatim transcript of Nimesh Shah's report on CNBC-TV18. Also watch the accompanying video.

For RDB, cigarette is not the core business and that is why now it looks that they are looking at hiving it off. The demerger was approved by the board and it has been in the process since June 1 and they want to focus only on the real estate side of the business. We understand that they have already appointed a banker for the same and they are looking at a valuation of Rs 375-550 crore. They are the fifth largest player in terms of cigarette manufacturing capacity, but currently its working only on 8-10% capacity and the rest is idle which is the reason why they are looking at selling their entire business including their assets in Kolkata, there are a couple of larger MNC players including Japan Tobacco company which has shown a bit of interest. We spoke to the management for an official comment and they did confirm that the demerger is on and they are looking at a process of inviting bids from the various players, but they have not entered into any specific talks with any company as yet, so clearly its in the process of finalizing or inviting bids but we do know that this is eventually on the blocks. If you look at current market cap and RDB's current business which is just about Rs 100 crore and we get a valuation of about Rs 500 crore for the cigarette business, so that is why the deal would be significant and so they are looking for hiving it off and selling it to the third party.