Raymond board nods to consolidate Tools & Hardware and Auto Components businesses into engineering biz

These businesses have demonstrated growth in EBITDA margins, generated free cash flows and are debt free.

Sep 28, 2021 03:09 IST India Infoline News Service

Raymond board of directors have approved the consolidation of Tools & Hardware and Auto Components businesses into Engineering business  for  improving synergies and exploring monetization options  for deleveraging Raymond Ltd. The overall  objective  being  value  creation  for  shareholders.  The  engineering  business  has  achieved  scale  and  improved market share in both domestic and global markets.

These businesses have demonstrated  growth in EBITDA margins, generated free cash flows and are debt free.

In a statement, Raymond stated that "our Real  Estate  business  launched  in  2019  which  started  development  of  land  in  Thane  is now  poised  for growth with a  focus  on  delivering a value  based  offering.  The  real estate  business will deliver around 3 million sq. ft. of residential projects and we have already achieved sales of over 70%  of launched inventory of ~2 million sq. ft. In a short span of time we have witnessed a good traction for  the  product  offered  by  us."

Further, Raymond added, "The  Real  Estate  division  is  a  sustainable  profitable  business  led  by  experienced  professional  team  with  a  clear  long  term  strategy  in  place.  Real  Estate  business  now  plans  to  capitalize  on  its  strengths  by  extending  beyond  Thane.  To  achieve  the  high  growth momentum  in  real  estate  business,  the  board  has  also  given  an  in‐principle  approval  for  subsidiarization of real estate business division through a wholly owned subsidiary."

Gautam  Hari  Singhania,  Chairman  &  Managing  Director  said,  “Raymond believes in nurturing and growing each of its businesses.  I am happy to share that our  Engineering  business  comprising  of  Tools  &  Hardware  and  Auto  Components  has  demonstrated  good performance and it is poised for future growth. We are consolidating the business to explore  all  options  available  to  us  for  monetization,  which  will  enable  deleveraging  leading  to  value  creation.  Additionally,  our  Realty  business  has  showcased  performance  since  its  launch  and  in  order to realize its full potential it will now be a wholly owned subsidiary of Raymond Limited. We  continue  to  focus  on  our  B2C  business  by  bringing  in  operational  efficiencies  and  synergies  to strengthen our Lifestyle business."

With a focus to fast track the recovery post pandemic Raymond will consolidate its B2C business by  transfer of Apparel Business into Raymond Ltd. This move will strengthen efficiencies, streamline &  simplify processes and bring in synergy benefits in terms of design & innovation, sourcing and retail  network.  

To enable  and  execute  the  above  decisions,  the  company  has  withdrawn  the  de‐merger  scheme of Lifestyle business announced in November, 2019.  These actions will enable each of the businesses for monetization which will fuel growth and deleveraging.

On Sensex, Raymond finished at Rs459.30 per piece up 2.6%. 

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