The existing company will retain its real estate projects, the Thane land bank, its B2B shirting business, the engineering businesses of auto components, tools and hardware, denim and FMCG.
Raymond on November 7 announced the restructuring of its core lifestyle business into a separate entity.
Every shareholder of Raymond Ltd will be issued the shares of the new company in the ratio of 1:1.
Raymond said the move will create a clear demarcation of lifestyle and other businesses, leading to the simplification of the group structure.
Raymond houses leading brands such as Park Avenue, ColorPlus and Parx.
In the same board meeting, it was decided that Raymond Ltd will allot equity shares and Compulsorily Convertible Preference Shares (CCPS) to JKIT, an associate company against the infusion of net proceeds of JKIT land sale that was announced in October 2019.
The company had received around Rs 700 crore through the land sale.
A total of Rs 350 crore will be used to repay the debt, thus deleveraging the Balance Sheet of Raymond Ltd.
The demerger will unlock the potential of the core Lifestyle Business through a new listed company which will feature—Branded Textile, Branded Apparel & Garmenting
The existing company will retain its real estate projects, Thane land bank, B2B Shirting business, engineering businesses of Auto Components and Tools & Hardware, denim and FMCG business
Gautam Hari Singhania, Chairman & Managing Director, Raymond Limited said: "For over three years now, we have been relentless in building the organization that is future ready and our efforts have been unwavering during this transformational journey despite multiple challenges. 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."
The infusion of net proceeds of JKIT land sale in Raymond Ltd will help the company in debt reduction.
Currently, the company's net debt stands at Rs 2,777 crore.
With a large network of over 1500 stores across more than 600 towns and cities, Raymond Lifestyle Business will offer an integrated play in the textile, apparel and garmenting segments both in domestic and global markets.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.