Raymond board approves demerger of real estate business; to list the realty vertical on exchanges

The board of Raymond on July 4 approved the demerger of the real estate business. Demerger aimed at exploiting the growth potential of the realty business

Raymond Limited on July 4 announced that it will demerge the real estate business to explicit the growth potential of the real estate business and attract fresh investors to participate in the realty business, the company said.

"This strategy to demerge the Real Estate business into a separate company that will be listed through automatic route is another step to enhance the shareholder value," said Gautam Singhania, MD of Raymond Ltd.

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.

It announced the vertical demerger of its real estate business into its wholly owned subsidiary, Raymond Realty Limited (RRL). Upon completion of this demerger, Raymond Ltd and Raymond Realty Limited (RRL) will operate as separate listed entities within the Raymond Group post all statutory approvals, the company said in a regulatory filing.

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 ₹1,592.65 crore in the last fiscal, accounting for 24% 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.

The new entity will seek automatic listing on stock exchanges and according to the scheme of arrangement, each Raymond Ltd (RL) shareholder will receive 1 share of RRL for every 1 share held in Raymond Limited.

This strategic move comes as Raymond's Real Estate Business has achieved scale, reporting revenue of ₹1,593 crore. (43% YoY growth) and EBITDA of ₹370 crore. in FY24, positioning it well to chart its own growth path as a separate entity, the company said.

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.

Raymond Realty has around 100 acres of land in Thane with around 11.4 mn sq ft RERA approved carpet area of which about 40 acres is currently under development. There are five ongoing projects worth ₹9,000 crore on its Thane land, with an additional potential to generate more than ₹16,000 crore, making a total potential revenue of over ₹25,000 crore from this land bank, the company said in a statement.

Leveraging an asset-light model, Raymond Realty has launched its first JDA 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 ₹7,000 crore. With the development of Thane Land Bank and current four JDA’s gives the company the potential revenue of ₹ 32,000 crore.

Commenting on the development, Gautam Hari Singhania, Chairman and Managing Director, Raymond Limited 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. This strategy to demerge the Real Estate business into a separate company that will be listed through automatic route is another step to enhance the shareholder value. The existing shareholders of Raymond Limited will get the shares in the new listed Real Estate company in a ratio of 1:1.”

The demerger aligns with Raymond Group's stated objectives of simplifying its corporate structure and enhancing shareholder value for operational and structural benefits. Leveraging Raymond's institutional strength, the move will allow for independent, dedicated management teams with industry-specific expertise to sharpen business focus and tailor investment strategies to each sector's unique dynamics, the company said in a statement.