The real estate division of textile giant Raymond Ltd. will be demerged, the company announced on Thursday, in an effort to maximise shareholder value and capitalise on the Indian real estate market’s development potential.
The business announced in a regulatory filing that the agreement between the resulting company, Raymond Realty Ltd., and its shareholders, as well as the demerged company, Raymond Ltd., had been authorised by the board.
Per the agreement, for every share held in Raymond Ltd., each shareholder of Raymond Ltd. will get one share of Raymond Realty.
In the most recent fiscal year, the real estate division’s standalone operational revenue was Rs 1,592.65 crore, or 24% of Raymond Ltd.’s overall income.
This will be contingent upon receiving the necessary permissions and sanction from the National Company Law Tribunal’s (NCLT) jurisdictional bench, as well as consent from the central government, shareholders, creditors, and/or other relevant authorities as may be designated by the NCLT.
The equity shareholders of Raymond Ltd. will get 6,65,73,731 equity shares of Raymond Realty Ltd. with a face value of Rs. 10 each upon the scheme’s effective date and demerger.
The National Stock Exchange of India (NSE) and BSE Ltd. would list the shares that Raymond Realty Ltd. issued.
Raymond Ltd. provided an explanation of its reasoning, stating that it aims to restructure the real estate industry that it operates both directly and through its subsidiaries.
It is suggested that the Group’s whole real estate business be consolidated under a single organisation in order to take advantage of the real estate industry’s growth potential and draw in new investors and strategic partners.
“Therefore, it is proposed to demerge the Real Estate Business Undertaking of Raymond Limited into Raymond Realty Limited thereby unlocking the value of the real estate business of Raymond Limited as a whole,” the business stated.
According to Raymond Ltd, the new company plans to apply for stock exchange automatic listing.
With Raymond’s real estate business reaching scale—reporting revenue of Rs 1,593 crore (growth of 43% YoY) and EBITDA of Rs 370 crore in FY24—and being well-positioned to forge its own growth path as an independent firm, this strategic move comes at the right time.
About 40 acres of Raymond Realty’s 100 acres in Thane are presently being developed. The entire property has an approved RERA carpet area of roughly 11.4 million square feet.
On its Thane land, there are five active projects valued at Rs 9,000 crore. There is also room for new projects that might yield over Rs 16,000 crore, giving this land bank the potential to earn over Rs 25,000 crore in revenue overall.
Raymond Realty recently started its first joint development agreement (JDA) project in Bandra, Mumbai, using an asset-light methodology.
Raymond has also inked three more JDAs in Mahim, Sion, and Bandra East Mumbai, bringing the total potential revenue from the four JDA projects in the Mumbai Metropolitan Area to more over Rs 7,000 crore.
The organisation has the potential to generate revenue of Rs 32,000 crore from the development of Thane Land Bank and the four ongoing JDAs.
Gautam Hari Singhania, Chairman and Managing Director of Raymond Ltd., said, “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.”
He said that another move to increase shareholder value is the plan to demerge the real estate business into a distinct company that will be listed through an automatic procedure.
“The existing shareholders of Raymond Limited will get the shares in the new listed Real Estate company in a ratio of 1:1,” Singhania stated.
The most integrated worsted suit maker in India, Raymond provides complete fabric and apparel solutions.
Among the top brands in its portfolio are “Ethnix by Raymond,” “Park Avenue,” “ColorPlus,” “Parx,” “Raymond Made to Measure,” and “Raymond Ready to Wear.”
With over 1,450 locations spread throughout more than 600 communities, Raymond boasts one of the biggest exclusive retail networks in the nation.
The company is active in the engineering sector, producing precision-engineered goods that are widely available in both domestic and foreign markets.