Raymond board approves business consolidation to explore monetisation and deleverage business

Raymond board approves business consolidation to explore monetisation and deleverage business


Textile to engineering conglomerate on Monday announced an organisational restructuring plan in a bid to monetise its assets and deleverage its business.

The plan will see its fast-fashion business consolidating with the parent company and the auto components and tools and hardware businesses merging into its engineering division. Meanwhile, its nascent real estate division will be subsidiarised into a wholly-owned company.

The company said that the reorganisation will improve synergies while giving an opportunity to monetise businesses and pare debt. Raymond Limited had a gross debt of Rs 2,470 crore as of 31 March, as per

research.

The stock of Raymond Limited gained 1.73% to close at Rs 447.8 per share on the BSE on Monday against a flattish Sensex.

As part of the scheme, the tools and hardware and the auto components businesses will be merged into JK Files Limited, a wholly-owned subsidiary of the company.

“We are consolidating the business to explore all options available to us for monetization, which will enable deleveraging leading to value creation,” Gautam Singhania, the chairperson of Raymond Limited said in a statement.

The company had in November 2019 announced the demerger of its apparel business held under the wholly-owned company Raymond Apparel Limited. The demerger scheme has been withdrawn and the lifestyle business will now be transferred to parent Raymond Limited to streamline the group’s B2C businesses. It owns brands like Park Avenue, Color Plus and Parx.

“This move will strengthen efficiencies, streamline and simplify processes and bring in synergy benefits in terms of design and innovation, sourcing and retail network,” the company said in a statement Monday.

Raymond had ventured into the real estate development business through Raymond Realty to monetise its nearly 125-acre contiguous land parcel at Thane’s Cadbury Junction.

For its maiden real estate development project, the branded apparel major carved out a 20-acre land parcel of the total land holding and will be developing a nearly 2.7 million sq ft residential project across 10 towers. The project has already received bookings for over 1,500 apartments.

In October 2010, Raymond had reached an out-of-court settlement with its labour union representing nearly 2,000 employees at the Thane unit. The labour union received total compensation worth Rs 313 crore in lieu of giving its consent for real estate development on the land that used to house Raymond’s textile unit until then. The settlement provided clearances from the government bodies to Raymond for a real estate project on the land that housed its flagship textile factory since 1925.

Raymond Limited had reported a consolidated loss of Rs 157 crore for the quarter ending 30 June on revenue of Rs 826 crore. Its textile, shirting, apparel and garmenting had reported a loss while tools and hardware, auto components and real estate businesses were in the black.



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