Demerger of Raymond’s realty arm: Shareholders to get shares at 1:1 ratio

NEW DELHI: The board of Raymond Limited, one of India’s top textile companies, on Thursday approved the vertical demerger of its real estate business into its wholly owned subsidiary, Raymond Realty Limited (RRL). Upon completion of this demerger, Raymond Ltd and Raymond Realty Limited (RRL) will operate as separate listed entities.

As per the scheme of arrangement, each Raymond Ltd (RL) shareholder will receive 1 share of RRL for every 1 share held in Raymond Limited. The company will issue 6.65 crore shares of Raymond Realty having face value of Rs 10 per share. This demerger will now require approvals from the National Company Law Tribunal (NCLT), shareholders and creditors of RL and other competent authorities. The shares will be listed on the BSE and the NSE.

The demerger plan aims to “exploit the growth potential of the real estate business and attract fresh set of investors / strategic partners to participate in the real estate business, it is proposed to consolidate the entire real estate business of the Group under one single entity,” the company said in a filing to the BSE.

Raymond’s realty division reported a revenue of Rs 1,593 crore (43% YoY growth) and EBITDA of Rs 370 crore in FY23-24. This segment accounted for 24.16% of RL’s total turnover last fiscal.

“Having stated that now we have clear three vectors of growth at Raymond group i.e. Lifestyle, Real Estate and Engineering, this corporate action is in line with creating shareholder value creation. This strategy to demerge the Real Estate business into a separate company that will be listed through automatic route is another step to enhance the shareholder value,” said Gautam Hari Singhania, Chairman & Managing Director, Raymond Limited.

The Mumbai-based group has already announced the demerger of its lifestyle business to Raymond Consumer Care (RCCL) to create a listed entity. Last year, the group had sold the consumer products business of RCCL to Godrej Consumer Products in an all-cash deal of Rs 2,825 crore.