The National Company Law Tribunal (NCLT), Mumbai Bench, Court – I, has approved the scheme of arrangement between Raymond Limited and Raymond Realty Limited, paving the way for the demerger of the real estate business from the parent company. The order dated March 27, 2025, was issued in connection with C.P.(CAA)/41/MB/2025 and C.A.(CAA)/239/MB/2024. The scheme was previously approved by the Board of Directors of both companies on July 4, 2024.

The certified copy of the NCLT order is expected to be obtained in due course, and the scheme will become effective upon filing the order with the Registrar of Companies (ROC).

Background of the Demerger

The scheme of arrangement seeks to reorganize the real estate business of Raymond Limited and consolidate it under Raymond Realty Limited, a wholly-owned subsidiary. The decision is aimed at unlocking value in the real estate business, enabling the company to focus on growth opportunities and attract strategic investors.

Rationale Behind the Demerger

The demerger aims to achieve the following objectives:

• Unlocking shareholder value: By creating a separate listed entity for the real estate business, investors can better allocate resources and track business performance.

• Focused management: Segregation of the real estate business will allow focused management of both entities, leading to enhanced operational efficiency.

• Attracting strategic investors: A dedicated real estate entity will attract specialized investors who can bring expertise and growth capital.

• Enhancing business potential: Each entity can pursue distinct business opportunities and optimize growth potential independently.

• Increased flexibility for shareholders: Post-demerger, shareholders will hold shares in both Raymond Limited and Raymond Realty Limited, giving them flexibility to manage their investments.

Details of the Scheme

As per the scheme of arrangement:

• Share Entitlement Ratio: Shareholders of Raymond Limited will receive one fully paid-up equity share of INR 10 each in Raymond Realty Limited for every one equity share of INR 10 held in Raymond Limited.

• Effective Date: The scheme will come into effect upon filing the certified order with the Registrar of Companies (ROC).

Approval Process and Regulatory Compliance

The NCLT order was granted after a thorough review of the scheme and compliance with relevant regulations under the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations).

The process included:

• Approval of the scheme by the Board of Directors of both companies on July 4, 2024.

• Filing of necessary applications with the NCLT and the subsequent issuance of order C.A. (CAA) 239/MB/2024 on December 19, 2024.

• Compliance with regulatory requirements, including approvals from BSE Limited and the National Stock Exchange of India Limited (NSE).

• Public notices and advertisements in Indian Express and Loksatta on February 4, 2025.

• Filing of compliance affidavits with the NCLT on February 27, 2025.

Key Benefits for Stakeholders

The demerger is expected to bring multiple benefits, including:

• Increased transparency: Each entity will focus on its core business segment, leading to better governance.

• Improved investor confidence: Listing Raymond Realty Limited separately will provide greater visibility and attract new investors.

• Enhanced capital allocation: Independent entities will have the flexibility to allocate resources and manage capital more efficiently.

• Specialization and efficiency: Each company can optimize its strategy and operations without overlap.

NCLT Observations and Conditions

The NCLT’s approval came after a thorough review, including:

• Compliance with accounting standards: The companies are required to ensure that all accounting entries comply with IND-AS 8 and other applicable standards.

• Protection of creditor interests: The scheme ensures that the interests of creditors remain safeguarded.

• Regulatory approvals: The companies are required to comply with the observations of BSE, NSE, and sectoral regulators, including Maharashtra Real Estate Regulatory Authority (MahaRERA).

• Income Tax Compliance: The scheme complies with provisions under Section 2(19AA) of the Income Tax Act, 1961, applicable to demergers.

Listing of Raymond Realty Limited

Following the effectiveness of the scheme, the equity shares of Raymond Realty Limited will be listed on both BSE Limited and NSE. Shareholders of Raymond Limited will receive proportionate shares in the new entity, thereby creating a separate and listed real estate entity.

Next Steps and Implementation Timeline

• Obtaining Certified Copy of NCLT Order: Expected in due course.

• Filing with Registrar of Companies (ROC): The scheme will become effective upon filing the order.

• Allotment and Listing of Shares: Issuance and listing of Raymond Realty Limited shares will follow.

Conclusion

The approval of the demerger scheme by NCLT marks a significant milestone for Raymond Limited, paving the way for enhanced business focus and value creation. Shareholders will benefit from the separation of the real estate business into an independent listed entity, providing greater investment flexibility and the potential for higher returns.

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