The promoters of Emami Ltd expect to reduce their pledged shares in the company to 10-15% of their holding by selling the group’s hospital business and real-estate owned by the promoters and few group companies, vice chairman Mohan Goenka said.
The promoters of the FMCG firm – Agarwal and Goenka families — own 54.27% in the company, which is popular for brands like Boroplus, Navratna and Zandu. About 32% of the promoter shareholding is currently pledged.
Emami’s hospital business, run under Amri Hospital brand, is in the process of getting sold to Manipal Group for about Rs 1800 crore, while the promoters expect to raise another Rs 700-800 crore by selling various real estate spread across the country.
Goenka said the proceeds from sale of the hospital business, which is expected soon, will help to reduce pledge by 4-5%. Next in line are parcels of land held by the promoters and by group companies like Emami Ltd and Emami Agrotech that will be sold off now that the real estate market has recovered after the pandemic, he said.
“We are in the process of appointing a consultant to sell off 45 acres in Hyderabad which might fetch around Rs 450-500 crore. More such land parcels will be divested, which would help us to reduce the promoter pledge to 10-15%,” said Goenka.
The promoters of Emami group had sold the cement business to Nirma group for Rs 5,500 crore in 2020. This reduced the debt and pledge to around 45% from a peak of 89%. The pledge had increased as the promoters took loans to fund other businesses by pledging their shares
After the exit from hospitals, Emami Group will continue with its flagship FMCG business through Emami Ltd, edible oil and spices through Emami Agrotech, real estate by Emami Realty, paper and pharma retail business.
Talking about recovery in FMCG volumes, Goenka said the October-December quarter should be better though there is concern around erratic monsoon in certain parts of the country like Jharkhand and Uttar Pradesh where rainfall is deficit. “But overall monsoon will be normal and inflation pressure is also easing.
So, demand should improve” he said.
He said certain products like Fair and Handsome, 7 Oils in One and Kesh King have already grown in double-digit volumes in July, which could be early signs of a turnaround in sentiments. “There are other signs like improvement in movement of stock from wholesalers to retailers in rural areas and some reduction in trade credit period,” said Goenka.
Emami has raked in big in modern trade and ecommerce channels with both together accounting for 15% of sales. Goenka said the combined sales contribution can move up to 18-19% because the growth rate of this channel is 40-50%.
