Textile company Arvind Ltd is going to demerge its branded apparel and engineering business into separately listed firms as the company looks forward to capitalise from its lifestyle segment which adds nearly 33% to its revenue. The company also said that the demerger will take place to focus on its core textiles business.
The branded apparel business will be demerged into Arvind Fashions and the engineering business will be demerged into Anveshan Heavy Engineering. On completion of the demerger, both the companies will be listed on the BSE. “The process is likely to be completed in eight months and so listing could happen by July-August 2018,” Sanjay Lalbhai, Chairman & MD of Arvind Ltd said in an interview with CNBC-TV18.
The listing is likely to be a rare instance of a company getting directly listed without an IPO. IPO-less listing is a rare phenomenon in India, save for SMEs and startups wishing to list on the BSE SME exchange. Capital markets regulator SEBI has put in place certain norms for companies which desire to take the direct listing route. Indian rules allow a company to be directly listed without an IPO, just that it has to meet the requirement of minimum 25% public shareholding beforehand.
The company on Wednesday reported a decline of 16.1% in its consolidated profit year-on-year at Rs 64.50 crore for the quarter ended September 30. The company had posted a net profit of Rs 76.65 crore during the same period previous fiscal, Arvind Ltd said in a stock exchange filing.
“Second quarter turned out to be another challenging quarter for the industry with GST implementation impacting our domestic textile business,” Arvind Ltd Director and CFO Jaayesh Shah said. On the outlook, he said the company expects the transitionary impact of GST to settle down and revenue growth to return to normalcy.