Shares of Lux Industries Ltd. fell over 7% to ₹1,616 on the NSE on Friday following the company's board approval for the proposed demerger. According to reports from The Economic Times, the stock dropped to its day's low after the company announced the in-principle approval for the business restructuring. Ace Investor Mukul Mahavir Agrawal owns nearly 1.5% stake in the company, as per NSE data reported by The Economic Times.
The board met on Thursday after members of the promoter and promoter group from the Todi family entered into a family settlement agreement (FSA). As reported by The Economic Times, the company clarified that Lux Industries itself is not a party to the agreement. The board had earlier, on November 22, 2023, approved the trifurcation of the business into three separate verticals, and following the FSA, the board has now given in-principle approval for the demerger, subject to necessary approvals from regulators and other stakeholders.
Under the proposal, Vertical A and Vertical C will be demerged into two separate resulting companies, both of which are expected to be listed later. According to The Economic Times, Vertical A will include Lux Cozi, Lux Parker, ONN and Lux Cottswool. Vertical B will comprise Lux Venus, Lux Nitro, Lux Inferno and Lyra. Vertical C will include Lux Classic, GenX, Lux Karishma, Lux Amore and Lux Champion. The resulting listed entity for Vertical A is proposed to be led by Ashok Kumar Todi or another family member, while Vertical C is proposed to be led by Navin Kumar Todi or a family member.
The company added that the Ashok Kumar Todi and Navin Kumar Todi families will no longer retain any management or control rights in Lux Industries Ltd., while the Pradip Kumar Todi family will continue to manage and control the company. As reported by The Economic Times, Vertical B will continue within Lux Industries and is proposed to be led by Pradip Kumar Todi or another member of his family. The board also approved the immediate incorporation of two wholly owned subsidiaries in West Bengal carrying the name "Lux".
Pursuant to the FSA and based on the recommendation of its audit committee, a revised brand licensing agreement has been approved and executed with Biswanth Hosiery Mills Ltd. (BHML) to protect the company's rights and obligations relating to licensed brands. According to The Economic Times, with this execution, the earlier agreement stands terminated with immediate effect. The principal "LUX" trademark, along with its design and font, will remain the exclusive property of BHML and will be perpetually licensed to Lux Industries and the two resulting entities for corporate use only.
