Raymond creates new consumer biz co;parent to focus on realty Mumbai, Nov 7 (PTI) In a major rejig, textile playerRaymond on Thursday announced hiving off the consumer andlifestyle businesses into a separate entity that will bepublicly traded valued at around USD 1 billion.
The company also announced a preferential allotment ofequity to the promoters, which will increase their stake by 5percentage points to over 48.
Chairman and managing director Gautam Singhaniaexpects return on capital from the new company will be almostthree-times the peers.
He also said the new company will be listed and theexisting shareholders of residual Raymond will get the sharesof the new company on a 1:1 basis.
Singhania said under the demerger scheme, promoterswill be utilising the Rs 350-crore gains from Thane land banksale to subscribe to the preferential shares, and the move isaimed at maximising shareholder value.
Residual Raymond will focus on realty, while the newholding company will control the lifestyle and consumerverticals, will together deliver a topline of Rs 5,500 crore.
Singhania was planning the demerger for the pastdecade but could not take it forward because of the high debtof over Rs 2,700 crore at Raymond. Another impediment was thelack of clarity on the revenue stream for residual Raymond.
He expects the restructuring to be completed over thenext three quarters. The first step is to book Rs 350 croregains from the Thane land deal, which will be followed withthe preferential allotment to promoters and the proceeds willbe utilised to deleverage the book of Raymond.
Following the preferential allotment, promoters' stakein Raymond will go up to 48.33 percent, Singhania said, addingthe lifestyle business will be listed and shares will be givento all Raymond shareholders on a 1:1 basis.
For the residual Raymond, the revenue opportunity fromthe realty play stands at Rs 4,500 crore over the next four-five years, while it also has other businesses including tools& hardware (Rs 400 crore), auto & engineering (Rs 300 crore)and B2B clothing (Rs 700 crore) with it.
Singhania said the sale of non-core assets willcontinue, but declined to offer a timeline or name the assets.
Singhania, embattled in a fight with his father, saidhis dream is to be just a shareholder and let professionalsmanage his businesses.
He said investors like focus and this rejig is aimedat the same as governance will get a fillip with this.
On the reported tie-up with Ayurveda major Patanjali,Singhania said it is on the backburner.
The Raymond scrip closed 6.94 percent up at Rs 673.70on the BSE as against a 0.45 percentage points rally on thebenchmark, reacting to the preferential allotment issue. Thedemerger was announced after the market hours. PTI AABEN BEN