Raymond Ltd said it will demerge its core lifestyle business into a separate listed entity to simplify the group structure and create investor opportunities.
The new entity, Raymond Lifestyle Ltd, will bring all its existing branded textile, apparel and garment businesses under one umbrella, said Gautam Hari Singhania, Raymond’s chairman and managing director on Thursday.
After the split, Raymond will retain its real estate project, land in Thane, manufacturing of shirts for business-to-business (B2B) customers, auto components, tools and hardware, along with the denim and consumer goods businesses. The Mumbai-based conglomerate also said that it has raised around ₹350 crore through a preferential share allotment to JK Investo Trade (India) Ltd, which is part of the promoter group firm, to pare debt of ₹2,777 crore.
“One thing I have consistently said in the last three years is we want to create shareholder value. First thing we need to do is monetize some assets. The question I have been consistently asked is what are we doing with the land. We will do whatever we can to monetize the land," Singhania told reporters.
On 9 October, the company announced selling a 20-acre land parcel in Mumbai’s Thane area to Xander-backed Virtuous Retail South Asia (VRSA) for ₹700 crore. It owns a total of 120 acres in the area. Raymond owns 125 acres of land in Thane and has been looking at ways to monetize the asset either through an outright sale or by developing it in a phased manner. In April last year, the company announced its entry into the real estate development business with plans to develop a 3000 unit-residential project on a 20 acre plot.
“With a real estate project that has a revenue potential of around ₹4,500 crore, the existing company would be primarily a real estate firm," Singhania said. As part of the demerger plan, the new lifestyle firm would be listed through mirror shareholding structure, wherein every shareholder would be issued shares of the new company in the ratio of 1:1.
Sanjay Bahl, group financial officer at Raymond, said infusion of net proceeds of the land sale would help the company in debt reduction, leading to better operational efficiencies.
“The demerger of the lifestyle business will enable the demerged company and the resulting companies to have focussed strategy and specialization for sustained growth and the ability to attract investors for better access to capital," Bahl said.
Raymond’s lifestyle business comprises around 1,500 stores across more than 600 towns and cities. Some of its leading brands include Raymond Ready to Wear, Park Avenue, ColorPlus, Parx and Raymond Made to Measure.