Haresh ShahOne of India’s oldest textile brands, Digjam & Reid & Taylor brand were acquired by Finquest Group through the Corporate Insolvency Resolution Process (CIRP). After five years, the Finquest Group has announced the consolidation of Reid & Taylor with Digjam, a move that will consolidate the two brands under a single corporate structure. This strategic integration will also pave the way for the listing of Reid & Taylor, leveraging Digjam’s existing status as a listed entity.
Finquest Group is Mumbai based group owned & controlled by Mr. Hardik Patel having diversified interest in Finance, paper and textile business. The group owns a listed company in Textile sector namely Digjam Limited.
Reid & Taylor International Private Limited (“RTIL“ or “Demerged Company”) is engaged in the business of textile manufacturing and undertaking job work services and trading activities under the brand name of Reid & Taylor.
Digjam Limited (“Digjam” or “Resulting Company”) is engaged in the business of trading in all kinds of textiles and manufacturing of high-quality woollen/worsted fabrics under the brand “DIGJAM”.
Acquisition of Brands through CIRP
RTIL journey is nothing short of a roller-coaster ride so far. RTIL was admitted into the Corporate Insolvency Resolution Process (CIRP) in 2018 after the National Company Law Tribunal (NCLT) found the company unable to repay debts—totalling over ₹4,100 crore—and deprecated its financial viability. Multiple revival attempts failed, and NCLT ordered liquidation, calling for the company to ideally be sold as a going concern.
In one of its kind decisions that time, in May 2019, NCLT permitted Finquest Financial Solutions, a key lender and first charge holder, to take symbolic possession of Reid & Taylor’s assets—including land in Mysore, inventory, machinery, and receivables—to oversee their sale and maximise value for creditors.
In 2020, through the insolvency process, the Finquest Group acquired Reid & Taylor, gaining control of the brand and its assets. Post-acquisition, the group invested heavily, over ₹750 crore to revive the business. Investments included a ₹300+ crore premium cotton shirting manufacturing facility at Bharuch, and boosting operations at the Mysore suiting plant.
Currently, RTIL operates two manufacturing plants:
- Suits unit in Mysore – Spread over 40 acres this facility produces 4.8 million meters of worsted fabric annually
- Shirting unit in Bharuch – 35 acre advanced facility manufacturing 19 million meters annually focusing on Giza cotton.
RTIL has recently expanded into exclusive brand outlets. Finquest group holds 75% of the equity share capital of RTIL while remaining stake is owned by Aabhuti Investment Fund Trust classified as public shareholder. The equity shares of the Company are presently not listed on any Stock Exchange(s). Recently, RTIL have approved shifting of registered office from the State of Maharashtra to the State of Tamil Nadu.
In 2020, Digjam too was acquired by Finquest Group through a Corporate Insolvency Resolution Process (CIRP). The equity shares of the company are listed and traded on national bourses. Further, Digjam is in the process of shifting its registered office from the State of Gujarat to the State of Tamil Nadu. Effectively, just prior to the proposed demerger, both the Demerged Company and the Resulting Company are aligning their registered offices in Tamil Nadu—a neutral, third location for both entities. Beyond facilitating a smoother demerger approval process, this relocation could also be driven by commercial considerations and potential transaction cost efficiencies, including possible stamp duty advantages
The Proposed Transaction
The Board of Directors of Digjam & RTIL have approved a composite scheme of Arrangement which shall inter-alia provide for the demerger of the “Demerged Undertaking” of Reid & Taylor International Private Limited into Digjam Limited.
The Demerged Undertaking means all the business, undertakings, properties, activities, operations, investments, assets and liabilities of whatsoever nature and kind and wheresoever situated, of the Demerged Company, in relation to and pertaining to the “Textile Business”. However, the scheme clarifies that the parcel of Land and building located at Mysore Karnataka, investments in equity shares of RNT Garments Private Limited and loan advanced to RNT Garments private Limited along with interest thereon by RTIL are Surplus assets of the Demerged Company and do not form a part of Demerged Undertaking, Thus, this assets will continue to be part of RTIL. This could be the reason for demerging the operations of RTIL instead of merging it with the demerged company. It is not clear whether operations (if carried as on date) at the Mysore unit will be shifted or land & building will be leased to the Resulting company.
The “Appointed Date” for the demerger is 1st July 2025 or such other date as may be fixed or approved by the National Company Law Tribunal. Interestingly, the date has been opted as mid-year date than having it as the start of the financial year.
Rationale
The key rationale of the Scheme is as below:
- Both the Companies involved in this Scheme are part of the Finquest Group (“Group”) and are engaged in similar business activities.
- Combining both the business divisions will enable the Resulting Company to optimize the utilization of the specialized skills and knowledge, cash flow profiles, and operational and training requirement. Additionally, take advantage of the economies arising out of the integration of the business under one entity.
- Optimal utilization of resources, operations on economies of scale, achieve cost savings, reduction in multiplicity of legal and regulatory compliances, and would aid rationalization, simplify business process and optimize resources and administrative expenses and provide focused leadership and management attention on the textile business activity of the group
Consideration & Swap Ratio
For demerger of Demerged Undertaking, the resulting company shall issue 46,481 (Forty-Six Thousand Four Hundred and Eighty-One) equity shares of the Resulting Company of face value of INR 10/~ (Rupees Ten Only) each fully paid up for every 100 (Hundred) equity shares of the Demerged Company of face value of INR 10/~ (Rupees Ten Only) each fully paid up.
As promoters own 75% in both companies. Promoters will continue to own the same stake in Digjam however, the capital size of the resulting company shall increase multifield. Pursuant to this, existing minority shareholders of Digjam shall witness significant dilution from ~25% to ~10.44%. The remaining public shareholding -19.56% will be owned by Aabhuti Investment Fund Trust.
Financials & Valuation
Clearly, RTIL is much bigger and better place than Digjam. While Digjam has grown from INR 1 crore revenue in 2020 to INR 18 crore in 2025; RTIL has still been much larger than Digjam.
Valuation
| Particulars | Digjam | RTIL-Demerged Undertaking |
| Assigned per share value | 57.12 | 26548.44 |
| Assigned Value in crore | 114 | 407 |
RTIL’s demerged undertaking has been valued at almost 4 times that of Digjam. It appears that, Digjam – being smaller, has fetched a better valuation multiple than RTIL’s demerged undertaking. Further, RTIL’s borrowing of ₹297 crore shall also likely to get transferred as part of undertaking.
Strategy for Finquest Group
Finquest group has strategically acquired two legacy brands in textiles from CIRP process in 2020’s. They kept Digjam as a listed entity with 90% stake. While for RTIL, it appears they took the help of financial partner, Aabhuti Investment Fund Trust as a partner. In December 2024, before going for corporate restructuring, Finquest Group sold 15% of their holding in the open market for a consideration of ₹21 crore. Thereafter, the group realigned registered offices and now going for a consolidation while retaining the Mysore property and certain investment private.
The consolidation will pave the way for bigger entity which shall commensurate with their plan of expansion and at the same time will facilitate exit for the financial partner taken during RTIL acquisition. Surplus funds can also be generated by monetising Mysore land which is likely to give significant returns. Further, Digjam as part of a strategic initiative to rationalise operations, enhance resource efficiency and optimise its asset, approved the discontinuation of operations at its sole manufacturing facility located at Jamnagar. It is not clear whether the company will focus more on the “outsourcing” model. It could be likewise, as Digjam has been valued on a discounted cash flow basis.
Further, with effect from the Effective Date, the name of the Resulting Company shall be changed to “Reid & Taylor Fashions Limited”.
Our Observations
The restructuring proposed is a natural and simple way to consolidate same/similar businesses owned by the same group. It also gives opportunities for public shareholders of unlisted company value creation and liquidity. Shifting of registered offices of both companies will optimise execution cost and stamp duty liability. Consolidation will enable promoters to invite strategic partners with a larger portfolio of brands and products and manufacturing facilities.
