MUMBAI: Sanitary ware player HSIL hopes to complete the demerger of its consumer products and building materials businesses soon and is awaiting necessary regulatory approvals.
The company recently announced demerger of consumer products distribution and marketing businesses into a new entity called Somany Home Innovation (SHIL).
It also demerged its furniture and home decor retail business into SHIL as also the distribution and marketing business relating to building products into new entity called Brilloca which is a wholly-owned subsidiary of SHIL.
“Normally it takes six-eight months for a merger/ demerger process to get completed. So we are awaiting BSE and NSE approvals and also from the Sebi.
“Then we will move to the NCLT. I think there is still four to five months to go for the demerger to take place,” HSIL vice-chairman and managing director Sandip Somany told PTI.
The company had said April 1 would be the cut-off date for the demerger scheme to become effective.
On the rationale for creating two new entities, he said, “Since we are into many products/categories, we wanted to sharpen our focus and better align the businesses to our end-consumers. We also wanted to improve competitiveness and operational efficiencies.”
After creating these two companies, HSIL would focus on the packaging business that includes glass bottles, PET bottles and security caps and closure.
SHIL would become be a publicly traded company post- demerger, but Brilloca will be a fully-owned subsidiary and will remain unlisted.
“As part of the plan, SHIL is going to be listed as soon as the demerger process is cleared by NCLT. Shareholders would be allotted the same number of shares in SHIL as they own in HSIL. It is a mirror shareholding of HSIL,” he said.
For SHIL, he expects the company to grow over 30-40 per cent a year for the next four-five years. The consumer product business now contributes around 10 per cent revenue at Rs 220 crore.
Brilloca would comprise the sanitary ware, faucets and shower, CPVC and PVC pipes businesses.
“On a consolidated basis for building materials business, we are looking at a growth of 20 per cent for the next five years,” he said.
Somany said they would be looking at a capex of Rs 175 -200 crore in FY19 across all the business verticals. -PTI