Raymond Demerges Its Branded Lifestyle Business, Shares Surge
Raymond also plans to reduce debt by issuing equity to JK Investo Trade, its associate company.
Shares of Raymond Ltd. surged Friday after it spun off its branded lifestyle business into a separate entity as part of a restructuring plan. The stock rose as much as 12.01 percent to Rs 754.20—the highest since July 5.
The company’s lifestyle business, which comprises branded textiles, branded apparel and garments, would be separately listed on the bourses after the demerger, the textile maker said in an exchange filing. These segments cumulatively contributed almost 81 percent in sales for the financial year 2018-19, the filing said.
After the demerger, Raymond’s shareholders would be entitled to shares in the company’s lifestyle business in the ratio of 1:1, mirroring the shareholding of the listed entity on the effective date, according to the filing.
The existing listed company will include verticals such as real estate, engineering businesses of auto components and tools, denim and consumer goods.
“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,” Gautam Hari Singhania, chairman and managing director of Raymond, said in a statement.
Raymond also plans to “fully reduce debt” by issuing equity to JK Investo Trade (India) Ltd., its associate company.
The company announced the allotment of equity shares and compulsorily convertible preference shares to JKIT at a price of Rs 674 per share aggregating to rupees Rs 350 crore.
As a result of equity issuance of Rs 225 crore and compulsorily convertible preference share issue of Rs 125 crore, JKIT’s stake would rise to 12.01 percent from the present 4.57 percent assuming full conversion into equity, the filing said.
JKIT sold about 20 acres of land in Thane for Rs 700 crore In October. Shareholders of JK Investo, in which Raymond holds 47.6 percent stake, had approved the sale in June.
Raymond’s total debt stood at Rs 2,504.3 crore, according to data compiled by Bloomberg as on Sept. 30.
The company said its foray into real estate saw 20 acres of land getting developed as a residential project. Around 650 flats have been booked within seven months of launch, it said.
The company’s branded apparel and garments business was aided by strong growth in sales of Parx and Park Avenue brands and higher exports from Japan.
Shares of Raymond have declined by more than 20 percent so far this year, while the Nifty 500 Index has risen by 6.5 percent.