Lux Industries Demerger: Stock in focus after board's in-principle nod for three-way split

Shares of Lux Industries Ltd. are in focus on Friday, April 24, after the company said its board of directors has given its in-principle approval for the demerger of the company.

The board of directors held a meeting on Thursday where the promoter and promoter group from Todi Family entered into a family settlement agreement (FSA). The company is not part of the FSA.

The board, in their meeting on November 22, 2023, had approved the trifurcation of the Lux Industries business into three verticals. Post the FSA, the board gave its in-principle approval for the demerger, it said, subject to approval from regulatory authorities and other stakeholders.

Vertical A and Vertical C of the company would be demerged into two resulting companies, which will be subsequently listed. The business of Vertical B will continue to remain in the firm and is proposed to be led by Pradip Kumar Todi or any other member from his family.

Vertical A will comprise Lux Cozi, Lux Parker, ONN and Lux Cottswool; Vertical B will comprise Lux Venus, Lux Nitro, Lux Inferno and Lyra and Vertical C will comprise Lux Classic, GenX, Lux Karishma, Lux Amore and Lux Champion.

The resulting companies to be listed for Vertical A is proposed to be led by Ashok Kumar Tod or any other member from his family and Vertical C is to be led by Navin Kumar Todi or any other member of his family.

The Ashok Kumar Todi and Navin Kumar Todi family will cease to hold any right to the management and/or control in Lux Industries Ltd. and the Pradip Kumar Todi family will continue to manage and control the firm.

The board also gave its approval for the immediate incorporation of the two wholly-owned subsidiaries in West Bengal with the name 'Lux'. Once the proposed subsidiaries are incorporated, the necessary intimation and disclosures will be given by the company in line with applicable provisions of SEBI Listing Regulations.

Lux Industries said the pursuant to the FSA and on recommendation of its audit committee, the revised brand licensing agreement is approved and executed between the firm and Biswanth Hosiery Mills Ltd. (BHML) to safeguard the company's rights and obligations over the licensed brands. Once this brand licensing agreement is executed with BHML, the existing one is terminated with immediate effect, it said.

Also, pursuant to aforesaid FSA the non-Lux brands owned by BHML has been assigned to other group companies of the promoter and promoter group of the Todi Family.

Hence, on recommendation of the audit committee, three brand licensing agreements with Biswanath Hosiery Brands Pvt Ltd, Biswanath Brands Pvt Ltd and PDT Realty and Investments LLP are approved and executed for licensing of non-Lux brands such as ONN, GenX and Lyra to safeguard the firm's rights and obligations over the licensed brands, it added.

The company said the principal 'LUX' trademark with design and font will remain the exclusive property of BHML at all times and be perpetually licensed in favour of Lux Industries and the two resultant entities for corporate purposes only. Hence, pursuant to the FSA, there will be no overall impact on the usage of intellectual property rights by Lux Industries, it added.

Shares of Lux Industries Ltd. ended the previous session 10% up at 1,747.05 apiece. The stock has risen 84.8% in the past month. The stock is currently under Stage 1 of the Additional Surveillance Measures (ASM) framework.

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