Knitwear maker Lux Industries will merge two units JM Hoisery and Ebell Fashions with itself. Post merger, Lux is expecting its topline to grow by 15 per cent with the company having a stronger footing in the premium hosiery segment.

JM Hosiery and Ebell Fashions are two privately held companies that are owned by the Todi family who are also promoters for Lux Industries.

According to Udit Todi, Senior Vice-President, Lux Industries, the merger will take place through a share-swap deal. Under this arrangement, Lux Industries will issue 48,00,000 shares to the promoters of JM Hosiery and Ebell Fashioes, that is, Todi family members. SR Battliboi & Co had been appointed for valuation purposes.

Lux Industries expects to complete the merger by the end of this fiscal. “There is no cash payment involved to any side. It is a share swap deal. We are going to apply for the necessary clearances,” Todi told BusinessLine .

Stronger balance sheet

Lux Industries reported a topline of ₹1,140 crore and a PAT of ₹79 crore in FY18. On the other hand, JM Hosiery and Ebell Fashions together have a topline of ₹491 crore and a profit after tax of about ₹38 crore for FY18. JM Hosiery, with a turnover of ₹293 crore in FY18, manufactures the Genx brand of athleisure and has a plant in Tirupur (Tamil Nadu).

Ebell, on the other hand, has its manufacturing facility in Kolkata (West Bengal) and makes the womenswear brand Lyra. It reported a topline of ₹198 crore.

According to Todi, the merger should benefit minority shareholders of Lux. Post merger, the earnings per share (EPS) of Lux should rise by 24 per cent to around ₹38.8 (from ₹31.38).

Debt equity ratio for Lux Industries (post merger) should be around 0.95. “We are expecting the topline to grow by 15 per cent this year. With consolidation of premium brands like Genx and Lyra with Lux, the top-line and bottom-line too, should get a boost through operational synergies and a single brand strategy,” he said.

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