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Promoters of Emami Group — the Goenka and Agarwal families — are likely to bring down pledge in FMCG arm, Emami Ltd, to zero by March 2021. This would entail an additional fund-raise of ₹500-600 crore which the group is likely to do through “monetisation of existing assets”.
Information available with the stock market says promoters hold 52.73 per cent of stake in Emami Ltd, the group’s flagship, and of this, 72 per cent of the shares are pledged.
According to Mohan Goenka, Director, Emami Group, and Director, Emami Ltd, the promoter share pledge in the FMCG arm will come down to 16-18 per cent on completion of sale of Emami’s cement business to Nirma Group arm, Nuvoco Vistas Corporation. The sale is likely to be concluded around May-June period of this year.
Of the ₹5,500 crore enterprise value of Emami Cement, a part will go towards retiring debt of cement unit, while a major chunk will go towards bringing down promoters’ pledge. If a break-up of how the proceeds are to be used is done, then ₹2,200 will go towards retiring the debt of Emami Cement. Of the remaining ₹3,300 crore that the promoters receive, around ₹800 crore has been set aside for taxation purposes. Incidentally, there is an 8 per cent security guarantee (of promoters shares) for a legal case against the cement company regarding some mines.
“We aim to bring down promoters pledge to zero by March 2021. So post the deal with Nuvoco Vistas, there will be need for some more money which can be raised through monetising existing assets in power or real estate,” he told BusinessLine .
“Debt at a group level will come down to ₹500-600 crore, from the existing ₹3,000 crore by May or June,” Goenka added.
Outlook
Emami Ltd reported an over 7 per cent increase in standalone net profit to ₹148 crore for the quarter ending December 31, 2019. The company had, in the year-ago-period, reported a net profit of ₹138 crore. The revenue from operations during the period under review saw a marginal one per cent dip, year-on-year, to ₹748 crore.
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