Dollar Industries Shares Jump On Merger Plan To Consolidate Promoter Group Entities

Dollar Industries Ltd's share price rose 8% on Monday after the company announced a proposed merger of nine promoter group companies into the listed entity.

Post-merger approval, the promoter and promoter group shareholding is expected to increase from 72.21% to 73.60%.

The company, in an exchange filing on Friday said that, Dollar Industries is one of India’s leading hosiery and garment companies with a strong brand presence and over five decades of industry leadership.

It further said that the proposed merger will consolidate certain promoter group companies into the listed Dollar Industries Ltd. These companies currently own the Dollar brand, the real estate used for Dollar Industries’ operations, and entities handling outsourced manufacturing, all of which will be transferred to the listed entity.

This consolidation will give Dollar Industries brand ownership, greater control over production, streamline administrative processes, reduce related party transactions, and strengthen governance, while enhancing efficiency, profitability, and positioning the company for long-term sustainable growth, the company said.

By merging manufacturing and job-work units, the company aims to achieve vertical integration, enhancing control over production processes and reducing reliance on external vendors, the company said.

This integration is expected to streamline operations, cut down on redundancies, and lower administrative and compliance costs, thereby improving overall operational efficiency, it further added.

Additionally, the merger will bring greater transparency to financial reporting by significantly reducing related party transactions, which in turn is likely to boost investor confidence, the company informed exchanges.

The scrip rose as much as 8% to Rs 396 apiece. It pared gains to trade 4.72% higher at Rs 383.10 apiece, as of 09:34a.m. This compares to a 0.32% advance in the NSE Nifty 50 Index.

It has fallen 24.73% in the last 12 months. The relative strength index was at 63.58.