Emami Group promoters on Monday sold 10 per cent stake in the FMCG flagship in a block deal to raise Rs.1,600 crore from a group of investors which includes SBI Mutual Fund, PremjiInvest, Amundi, IDFC and L&T Mutual Fund amongst others which will help reduce promoter debt.
The tax refunds following favourable court orders would eventually pave the way for the custodian to release the assets of the Mehtas.
The group in a media statement said the proceeds from the transaction undertaken through the stock exchange will help to reduce promoter debt which was used to fund newer businesses like cement and solar power. Post the stake sale, promoter holding in Emami Ltd will stand at 62.74% and the promoters have no immediate plan of further equity dilution.
Emami Ltd director Mohan Goenka said the promoters have concluded a stake sale which will ease the liquidity position of the promoter group and reduce debt. “We are committed to maintain our significant majority stake in the company and do not anticipate any further dilution of stake in the foreseeable future,” he said.
Emami Group director Aditya Agarwal said the promoters are confident about the growth prospect of the group and remain steadfast in working towards the best interests of all stakeholders.
The Emami group promoters include the two founders, RS Agarwal and RS Goenka, and their families. The group did not specify the total debt of the promoters. The Emami scrip was down by 1.61% at Rs.355.05 at Monday’s closing on the Bombay Stock Exchange. The benchmark Sensex ended 0.87% lower.
Shares of Kolkata-based Emami plunged as much as 11% on 11 February to a four year low over the romours of a sale of pledge shares.
Apart from FMCG, the group is also into several other businesses such as cement, edible oil, newsprint, retail which includes a pharmacy chain Emami Frank Ross, bio-diesel, hospitals, art and real estate. Emami group employs 25,000 people with a group turnover of Rs.12,000 crore and market valuation of Rs.50,000 crore, as per its website. Emami Ltd revenue in 2017-18 was Rs.2,364.27 crore.
Edelweiss Securities senior vice-president (institutional equities) Abneesh Roy said though the deal has been done at a low price, it will reduce promoter debt level concerns.
Emami Ltd reduced its debt from Rs.390 crore in FY17 to Rs 118 crore in FY18. As of quarter ended December 2018, the promoters had pledged 47.58% of their total holding in Emami Ltd. In Emami Paper Ltd, the promoters have pledged 61.75% shares out of their total holding of 74.97%.
As per a September report by Crisil, Emami Cement had a total debt of Rs.2,179.5 crore. The group had plans to raise funds from an initial public offering to reduce debt, but the plans have been postponed as of now.
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