Raymond Ltd, the renowned textile major, has announced plans to demerge its real estate business into a separate entity called Raymond Realty Ltd. This strategic move aims to unlock the growth potential of Raymond's real estate portfolio, which accounts for 24% of the company's total revenue. The demerger will allow Raymond Realty to operate independently and potentially attract fresh investors or strategic partners, while enabling Raymond Ltd to focus on its core textile and engineering businesses. The new real estate company will inherit a significant land bank in Thane, with ongoing projects valued at over INR 9,000 crore and the potential to generate more than INR 25,000 crore in revenue. Additionally, Raymond Realty has recently expanded its footprint in Mumbai through several joint development agreements, further strengthening its real estate portfolio.
Textile major Raymond Ltd has announced plans to demerge its real estate business to unlock shareholder value and capitalize on the growth potential in the Indian property market. The company's board has approved a scheme of arrangement to spin off the real estate division into a separate entity called Raymond Realty Ltd.
Under the scheme, each shareholder of Raymond Ltd will receive one share of Raymond Realty for every share they hold in the parent company. The real estate division of Raymond Ltd had a standalone operational revenue of INR 1,592.65 crore in the last fiscal, accounting for 24% of the company's total revenue.
The demerger is subject to regulatory approvals, including from the National Company Law Tribunal (NCLT), as well as the consent of shareholders and creditors. Upon the scheme's implementation, Raymond Realty will issue 6,65,73,731 equity shares of INR 10 each to Raymond Ltd's shareholders, and the newly-formed entity will be listed on the BSE and NSE.
Raymond Ltd cited the need to consolidate its real estate business under a single entity to exploit the segment's growth potential and attract fresh investors or strategic partners. The company believes this strategic move will unlock the value of its real estate business as a whole.
Raymond Realty currently has around 100 acres of land in Thane, with a RERA-approved carpet area of approximately 11.4 million sq ft, of which 40 acres are under development. The company has five ongoing projects worth INR 9,000 crore and the potential to generate over INR 16,000 crore from the Thane land bank, totaling a potential revenue of more than INR 25,000 crore.
Additionally, Raymond Realty has recently launched its first joint development agreement (JDA) project in Bandra, Mumbai. It has signed three more JDAs in Mahim, Sion, and Bandra East, with a combined revenue potential of over INR 7,000 crore.
This demerger is part of Raymond's strategy to create shareholder value by clearly delineating its three business vectors: lifestyle, real estate, and engineering. The company's Chairman and Managing Director, Gautam Hari Singhania, believes this move will enhance shareholder value and provide existing Raymond Ltd shareholders with shares in the new listed real estate company in a 1:1 ratio.
Raymond is India's largest integrated worsted suiting manufacturer offering end-to-end solutions for fabric and garmenting. The group also has a presence in the engineering space engaged in precision-engineered products with an expansive presence in national as well as international markets.
The demerger of Raymond's real estate division is a strategic decision that underscores the company's commitment to creating shareholder value. Raymond is positioning itself for growth and diversification, with the real estate arm set to capitalize on the promising Indian property market.
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