Shares of Lux Industries Ltd. fell over 7% to their day’s low of Rs 1,616 on the NSE on Friday, after the company said its board had granted in-principle approval for the proposed demerger of the business. Ace Investor Mukul Mahavir Agrawal owns nearly 1.5% stake in the company, NSE data showed.
The board met on Thursday after members of the promoter and promoter group from the Todi family entered into a family settlement agreement (FSA). The company clarified that Lux Industries itself is not a party to the agreement.
It said the board had earlier, on November 22, 2023, approved the trifurcation of the business into three separate verticals. Following the FSA, the board has now given in-principle approval for the demerger, subject to necessary approvals from regulators and other stakeholders.
Under the proposal, Vertical A and Vertical C will be demerged into two separate resulting companies, both of which are expected to be listed later. Vertical B will continue within Lux Industries and is proposed to be led by Pradip Kumar Todi or another member of his family.
Vertical A will include Lux Cozi, Lux Parker, ONN and Lux Cottswool. Vertical B will comprise Lux Venus, Lux Nitro, Lux Inferno and Lyra. Vertical C will include Lux Classic, GenX, Lux Karishma, Lux Amore and Lux Champion.
The resulting listed entity for Vertical A is proposed to be led by Ashok Kumar Todi or another member of his family, while Vertical C is proposed to be led by Navin Kumar Todi or a family member.
The company added that the Ashok Kumar Todi and Navin Kumar Todi families will no longer retain any management or control rights in Lux Industries Ltd., while the Pradip Kumar Todi family will continue to manage and control the company.
The board also approved the immediate incorporation of two wholly owned subsidiaries in West Bengal carrying the name “Lux”. The company said it will make the required disclosures once these subsidiaries are incorporated, in accordance with SEBI Listing Regulations.
Lux Industries further said that pursuant to the FSA and based on the recommendation of its audit committee, a revised brand licensing agreement has been approved and executed with Biswanth Hosiery Mills Ltd. (BHML) to protect the company’s rights and obligations relating to licensed brands. With this execution, the earlier agreement stands terminated with immediate effect.
It also stated that non-Lux brands owned by BHML have been transferred to other promoter group companies of the Todi family under the FSA.
Accordingly, on the recommendation of the audit committee, three separate brand licensing agreements have been approved and executed with Biswanath Hosiery Brands Pvt Ltd, Biswanath Brands Pvt Ltd and PDT Realty and Investments LLP for licensing non-Lux brands such as ONN, GenX and Lyra, safeguarding the company’s rights and obligations.
The company clarified that the principal “LUX” trademark, along with its design and font, will remain the exclusive property of BHML and will be perpetually licensed to Lux Industries and the two resulting entities for corporate use only. It added that the FSA will have no overall impact on the company’s use of intellectual property rights.
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