Raymond to demerge real estate business, list realty vertical on exchanges

In a regulatory filing, the company said its board has approved the scheme of arrangement of Raymond Ltd (demerged company) and Raymond Realty Ltd (resulting company) and their respective shareholders

Textile major Raymond Ltd on Thursday said it will demerge the real estate business to unlock the value for shareholders and harness growth potential in the Indian property market.

In a regulatory filing, the company informed that its board has approved the scheme of arrangement of Raymond Ltd (demerged company) and Raymond Realty Ltd (resulting company) and their respective shareholders.

As per the scheme of arrangement, each Raymond Ltd shareholder will receive one share of Raymond Realty for every one share held in Raymond Ltd.

The standalone operational revenue of the real estate division stood at Rs 1,592.65 crore in the last fiscal, accounting for 24 per cent of the total revenue of Raymond Ltd.

This will be subject to the requisite approvals and sanction of the jurisdictional bench of the National Company Law Tribunal (NCLT) and subject to the approval of shareholders and/or creditors, central government, or such other competent authority as may be directed by the NCLT.

Upon the scheme coming into effect on the effective date, on demerger, Raymond Realty would issue 6,65,73,731 equity shares of Raymond Realty Ltd having a face value of Rs 10 each to the equity shareholders of Raymond Ltd.

The shares issued by Raymond Realty Ltd would be listed on BSE Ltd and the National Stock Exchange of India (NSE).

Explaining the rationale, Raymond Ltd said it seeks to reorganise the real estate business carried on by itself and through its subsidiaries.

"To exploit the growth potential of the real estate business and attract a 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.

"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 company said.

Raymond Ltd said the new entity will seek automatic listing on stock exchanges.

This strategic move comes as Raymond's real estate business has achieved scale, reporting revenue of Rs 1,593 crore (43 per cent YoY growth) and EBITDA of Rs 370 crore in FY24, positioning it well to chart its own growth path as a separate entity.

Raymond Realty has around 100 acres of land in Thane with approximately 11.4 million sq ft RERA-approved carpet area of which about 40 acres is currently under development.

There are five ongoing projects worth Rs 9,000 crore on its Thane land, with an additional potential to generate more than Rs 16,000 crore, making a total potential revenue of over Rs 25,000 crore from this land bank.

Leveraging an asset-light model, Raymond Realty has recently launched its first JDA ( joint development agreement) project in Bandra, Mumbai.

Additionally, Raymond has signed three new JDAs in Mahim, Sion, and one more in Bandra East Mumbai, taking the combined revenue potential from four JDA projects in the Mumbai Metropolitan Region to over Rs 7,000 crore.

The development of Thane Land Bank and the current 4 JDAs gives a potential revenue of Rs 32,000 crore to the company.

"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," Gautam Hari Singhania, Chairman cum Managing Director of Raymond Ltd, said.

This strategy to demerge the real estate business into a separate company that will be listed through an automatic route is another step to enhance the shareholder value, he added.

"The existing shareholders of Raymond Limited will get the shares in the new listed Real Estate company in a ratio of 1:1," Singhania said.

Raymond is India's largest integrated worsted suiting manufacturer offering end-to-end solutions for fabric and garmenting.

It has some of the leading brands within its portfolio 'Raymond Ready to Wear', 'Park Avenue', 'ColorPlus', 'Parx', 'Raymond Made to Measure' and 'Ethnix by Raymond', amongst others.

Raymond has one of the largest exclusive retail networks in the country with about 1,450 stores in more than 600 towns.

The group has a presence in the engineering space engaged in precision-engineered products with an expansive presence in national as well as international markets.