Kitex Garments Limited convened separate meetings of its equity shareholders and unsecured creditors on July 24, 2026, to approve a Scheme of Arrangement involving Kitex Childrenswear Limited. The corporate action follows an order dated January 22, 2026, issued by the Hon'ble National Company Law Tribunal (NCLT), Kochi Bench, in case number CA(CAA)/01/KOB/2026. The meetings were conducted through video conference to facilitate consideration and approval of the scheme under Sections 230 to 232 of the Companies Act, 2013.

The proceedings were structured into two distinct sessions on July 24, 2026. The meeting for equity shareholders commenced at 11:00 A.M. IST and concluded at 11:44 A.M. IST. The subsequent meeting for unsecured creditors began at 02:30 P.M. IST and ended at 03:04 P.M. IST. Both gatherings were chaired by Mr. Kuldip Kumar Kareer, a former Judicial Member of the NCLT, who was appointed by the tribunal to oversee the process. Mr. Rajmohan R, a practicing chartered accountant, served as the scrutinizer for both meetings.

Remote e-voting for these resolutions was accessible from Monday, July 20, 2026, at 9:00 A.M. IST until Thursday, July 23, 2026, at 5:00 P.M. IST. Shareholders and creditors who had not cast their votes remotely were provided an additional 15-minute window to vote electronically during the respective live meetings. Ms. Dayana Joseph, Company Secretary and Compliance Officer of Kitex Garments Limited, facilitated the proceedings and confirmed that the requisite quorum was present for both assemblies as per the NCLT's directions.

The primary business transacted at both meetings was the approval of the Scheme of Arrangement between Kitex Childrenswear Limited (the demerged company) and Kitex Garments Limited (the resulting company). This resolution required a requisite majority for passage. The chairman briefed attendees on the proposed scheme's details before the voting process commenced. No questions were registered by shareholders or creditors for the Q&A session; however, a chat box option remained available for participants to raise queries or express views during the virtual sessions.

Meeting Details and Compliance

The meetings were conducted in strict compliance with the Companies Act, 2013, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and applicable circulars from the Ministry of Corporate Affairs and SEBI. The summary of proceedings has been filed with the Bombay Stock Exchange (BSE) and the National Stock Exchange of India Limited (NSE) as per regulatory requirements.

The resolution sought approval for the scheme without modifications, aligning with the tribunal's earlier directives. The absence of registered questions suggests a streamlined procedural flow, with stakeholders utilizing the chat interface for any immediate clarifications. The final outcome of the voting will determine the next steps in the implementation of the demerger plan between the two entities.

Kitex Garments Limited has filed an addendum to the notice for its equity shareholder meeting scheduled on July 24, 2026, regarding the scheme of arrangement with Kitex Childrenswear Limited. The meeting, authorized by the National Company Law Tribunal, Kochi Bench, aims to consolidate the textile business division of Kitex Childrenswear Limited into Kitex Garments Limited. This strategic move is intended to facilitate focused growth, operational efficiencies, and better market share in the infant garment manufacturing sector.

The scheme involves the demerger of the textile undertaking from Kitex Childrenswear Limited and its merger into Kitex Garments Limited. As consideration, Kitex Garments Limited will issue new equity shares to the shareholders of Kitex Childrenswear Limited based on a share entitlement ratio. The transaction is structured to optimize business operations and achieve economies of scale by combining similar activities under a single entity.

Financial Projections and Valuation

The addendum provides detailed financial projections for the resulting entities. For Kitex Garments Limited, revenue is projected to rise from ₹1,347 crore in FY26 to ₹2,460 crore by FY30, with Profit After Tax (PAT) expected to reach ₹738 crore in the same period. The demerged undertaking (KCL-DU) anticipates revenue growing from ₹820 crore in FY26 to ₹1,322 crore in FY30.

Valuation metrics based on comparable companies, including Gokaldas Exports Limited and S.P. Apparels Limited, indicate an average forward EV/EBITDA multiple of 12.01 and a forward P/E multiple of 19.7 for FY26.

Post-Transaction Structure

Upon completion of the scheme, the shareholding pattern of Kitex Garments Limited will change significantly. Promoters' holding is expected to increase to 59.46%, while public shareholding will dilute to 29.65%. Kitex Childrenswear Limited's stake in Kitex Garments Limited will reduce from 15.92% to 10.89%.

The net worth of Kitex Garments Limited is projected to increase to ₹1,28,775.19 lakh post-arrangement, while Kitex Childrenswear Limited's net worth will adjust to ₹8,826.31 lakh following the demerger. The company confirmed that the scheme is in compliance with applicable securities laws and that no regulatory actions are pending against the involved entities.

Source: https://lodr-files.dhan.co/lodr-inputs/Company/INE602G01020/2e92aff6a80c4067.pdf