All about Arvind Demerger:

Though the key benefit of investing in equity of a company is to participate in its growth, the tangible benefits for a share holder could be summarized as:

1. Rise in Share price, resulting in appreciation in the investment value
2. Corporate benefits like 
• Bonus
• Stock split and 
• Demerger.

While we have heard of bonus and stock split, demerger is a rare phenomena. It is an action by which the company hives off its group company businesses as seperate entity. These shares are credited to the investors demat account. But many investors wonder when we bought these shares.

For instance, Arvind Ltd shares were quoting at Rs.315 on 27th Nov 2018. But on 28th Nov 2018, its share prices fell down to Rs.108. When markets are volatile and chaotic, many investors assume that the stock prices have crashed due to some bad news. But here Arvind has demerged two of its businesses and alloted the shares to its share holders. Infact, it is a big gift for investors - since they can now accumulate those businesses / verticals which impress them the most.

Arvind has alloted shares of Arvind Fashions Ltd and Anveshan Heavy Engineering Ltd in following ratio:

From now on the businesses under-

• Arvind ltd would be : Textile (denim, fabric ,and garments) and advance material business 
• Aravind Fashions Ltd : holds Brand Arvind Stores and Retail Sales of brands like US Polo Association, Tommy Hilfiger, Calvin Klein, Arrow, Flying Machine, Gap, Sephora and other iconic brands. 
• Anveshan Heavy Engineering Ltd : Engineering businesses under The Anup Engineering Ltd (TAEL) mainly manufacturing critical process equipment for core business like heat ex-changers and pressure vessels for oil and gas and fertiliser industries.
• Both these shares are expected to be listed by January 2019.

Arvind plans to increase its share in the market by three times to manufacture over 90 million pieces in the next three years. The new garment facilities in Andhra Pradesh, Jharkhand and Ethiopia, will help in executing this target. Arvind also launched its largest garmenting hub in Gujarat as a part of its capacity expansion plan. The hub with investment of Rs 350 crore, has three facilities set up near Ahmedabad and will contribute to the capacity of 3 million garments per month.

The advance material division (AMD) along with garments, currently accounts for 30 % of the business. Arvind plans to increase the share of these two segments to 50%