Emami Group has put all its myriad ventures on the block to stave off any further stake sale in its flagship listed company as it vows to pare promoter-level debt to zero.
The group, founded by childhood friends Radhe Shyam Agarwal and Radhe Shyam Goenka, is ready to offload stakes in cement, hospital, real estate, retail and paper — sparing only the edible oil and FMCG businesses.
The promoters have set a timeline of 6-8 months to bring down their debt, estimated at Rs 2,200 crore, which was raised by pledging their shares in listed Emami Ltd, the mainstay of the group and the flagship.
Owners have set the enterprise value of loss-making hospitals at around Rs 1,400 crore, land parcels at Rs 4,500 crore and the cement business at Rs 6,000 crore.
“We are ready to sell any business if there is a good offer. It could be a strategic part sale or outright exit. The idea is to get rid of promoter debt,” Mohan Goenka, director of Emami Group, said.
His comments to this newspaper came hours after the promoters sold 10 per cent stake of their combined holdings in Emami Ltd on the bourses, raising Rs 1,230 crore.
SBI Mutual Fund was the largest buyer of the shares, at Rs 270 apiece.
Promoters now hold a 52.73 per cent stake in Emami Ltd, a level they intend to maintain. In February, it had offloaded the same quantity of shares for Rs 1,600 crore.
Goenka rued that the owners had to sell Emami shares at such rockbottom price and vowed not to sell anymore.
Myriad ventures
Emami Group runs a hospital chain in eastern India under the AMRI brand, with a combined bed strength of 1,200. It runs pharmacy chain under Frank Ross and a stationery and books business under the Starmark brand.
Moreover, it is a big player in real estate, mainly housed under listed entity Emami Realty Ltd and unlisted associate firm Orbit. The owners have several land parcels across the country too, besides stakes in joint ventures such as Urbana and South City in Calcutta.
It has also forayed into cement, having built a capacity of 5.6 million tonnes, mostly in the east, and going up to 9.3 million tonnes. It recently received approval to make an initial public offering.
Emami is also a large player in paper, producing newsprint, paperboard and cardboard. This is also a listed entity, where promoters hold a 74.97 per cent stake. The group has a significant presence in edible oil but Goenka clarified that the promoters would not sell any stake in this “branded business”.
Goenka said the owners were evaluating proposals on all fronts, except edible oil. “We had taken debt from NBFCs and mutual funds and invested in other businesses. But these are illiquid and can’t be monetised when needed fast. Hence, we had to sell Emami shares,” Goenka explained.
The Emami scrip has sunk to a five-year low, hit by the slowdown in consumption. The market has punished stocks with high leverage of the promoters. On Monday, the stock ended at Rs 270.05 on the NSE, down 6.65 per cent. The owners are under pressure to pay back their dues to NBFCs and MFs as the value of the collateral against loan has eroded with the fall in stock prices.
Filing with the exchanges showed 54.75 per cent of the promoter holding is still encumbered. The figure will come down after this round of stake sale. Promoter debt was earlier as high as Rs 4,000 crore.
