MUMBAI: Industrialist Gautam Singhania is separating the flagship textile and apparel businesses from Raymond to a new entity.
The existing Raymond will retain the real estate, auto component and consumer products businesses, which had a combined revenue of Rs 1,549 crore in fiscal 2019.
The demerged lifestyle business, with revenue of Rs 5,284 crore, will be listed on the stock exchanges, mirroring the shareholding structure of Raymond. Raymond shareholders will be getting an equal number of shares of the new entity.
The bifurcation of the diversified enterprise, according to Singhania, will simplify the structure and, more importantly, the lifestyle-focused entity will not have the “conglomerate discount” of the undivided Raymond in the stock market. Raymond has a market cap of Rs 4,135 crore based on the scrip’s Thursday closing price of Rs 674 on the BSE. Investors like focus and the restructuring is aimed at that, the chairman said.
The latest move comes even as Singhania is engaged in an arbitration with his father Vijaypat to settle a dispute regarding allocation of a duplex flat in JK House in south Mumbai. The son and father’s estrangement traces to 2015 when the latter gifted Singhania his 37% stake in Raymond. Singhania said his dream is to be just a shareholder and let professionals manage the businesses.
To begin with, Singhania will be merging Raymond Apparel and Scissors Engineering with Raymond. Raymond Apparel houses the Rs 1,622-crore branded retail business while Scissors Engineering is into auto components. Thereafter, the lifestyle business will be separated from Raymond and parked in a new company. The denim and the wholesale shirting businesses will, however, be retained within Raymond. The denim business is a 50:50 joint venture with European player UCO. There is no benefit obtained by the promoter from the proposed restructuring, Raymond said.
In a parallel development, JK Investo, one of the promoters of Raymond, will put in Rs 350 crore in the company through equity and convertible preference stock. The fund infusion will pare Raymond’s over Rs 2,500-crore debt and increase the promoters’ overall stake in the company to 48% from 44% once the preference stock is converted into equity. JK Investo had recently sold 20 acres of land in Mumbai to Virtuous Retail
Published On : 08-11-2019
Source : Times of India
