The board of Arvind has approved a scheme of arrangement with its wholly owned subsidiary Arvind Infrastructure Ltd (AIL) for demerger and transfer of its real estate undertaking to AIL.

AIL will issue to the shareholders of Arvind Ltd one share of ₹10 each for every 10 shares of ₹10 held by them in Arvind. AIL will be separately listed on stock exchanges.

Strategic fit

While commenting on the demerger of the real estate business, Jayesh Shah, Director and Chief Financial Officer, said Arvind sees an opportunity and strategic fit in real estate development. The demerger will allow Arvind to deploy its resources fully in its core activities and allow AIL to raise further capital and debt as required for its growth.

Shares of Arvind jumped 15.2 per cent at ₹242.9 on Wednesday. During intra-day trade, the stock registered a high of ₹244.95 on the NSE.

AIL, engaged in real estate development, is currently managing 11 projects in Ahmedabad and Bangalore spanning 5.3 million square feet over 360 acres of land.

Meanwhile, Arvind, a leading integrated textile and branded apparel player, reported a 14 per cent growth in profit after tax and 19 per cent in consolidated revenue in the first quarter of 2014-15, ended June 30, compared with the corresponding period last fiscal.

While the company’s revenues were ₹1,773 crore (₹1,491 crore), profit after tax stood at ₹90 crore (₹79 crore) during the period, according to a statement here.

Commenting on the results as well as outlook of the company, Shah said the revenue growth of 19 per cent was led by a 26 per cent growth in the brands and retail business and a 13 per cent growth in textile business with stable operating profit margin expansions in both.

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