Arvind shares fall 65% ahead of demerger to close at Rs 109

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Mumbai | Published: November 29, 2018 3:46:02 AM

Amidst the demerger process and allotment of the shares of Arvind Limited to Arvind Fashions Limited and Anveshan Heavy Engineering, the company's shares on Wednesday fell by 65%, to close at Rs 109 on the Bombay Stock Exchange. 

Arvind shares fall 65% ahead of demerger to close at Rs 109 (File)

Amidst the demerger process and allotment of the shares of Arvind Limited to Arvind Fashions Limited and Anveshan Heavy Engineering, the company’s shares on Wednesday fell by 65%, to close at Rs 109 on the Bombay Stock Exchange.  The stock hit its new 52-week low of Rs 90.25 during the day.

As informed to the stock exchanges, Arvind will be demerged by November 29,2018 and the shareholders of Arvind Fashions Limited (AFL) will receive one fully paid up equity share of Rs 4 each for every 5 shares held in Arvind Limited and Anveshan Heavy Engineering’s shareholders will be allotted one fully paid up equity share of Rs 10 each for every 27 shares held in Arvind Limited.

The textile business which includes denim, fabric and garments segment, along with the advance material business will remain with Arvind Limited. The brand and retail business will be carried under Arvind Fashions and the engineering business will be under The Anup Engineering (TAEL).

After the demerger, the process of relisting as per Sebi guidelines will initiate and the new entities of fashion and engineering business will be relisted on the stock exchanges by first half of January, 2019.

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As per the analyst report from Edelweiss Securities, the firm has planned to use its resources specifically for the textile and advance material division business. Thus, capital expenditure of Rs 2,500 crore has been planned for investment over the next five years till financial year 2023. With revenue growth of 15% in the garments in Q2 of FY19, Arvind plans to increase its share in the market by three times to manufacture over 90 million pieces in the next three years. The new garment facilities in Andhra Pradesh, Jharkhand and Ethiopia will help in executing this target. Arvind also launched its largest garment hub on Tuesday in Gujarat as a part of its capacity expansion plan. The hub with investment of Rs 350 crore, has three facilities set up near Bavla town in Ahmedabad and will contribute to the capacity of 3 million garments per month.

The advance material division (AMD) along with garments, currently accounts for 30 % of the business. Arvind plans to increase the share of these two segments to 50%.

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