Relaxo Footwears Limited has announced its strategic decision to establish a footwear manufacturing facility in Kenya through a joint venture. The company will subscribe to a 51% stake in the newly incorporated entity, Relaxo Kenafric Footwears Limited, for a cash consideration of up to ₹35.70 Crore. This move aims to expand Relaxo’s international footprint and strengthen its presence in the African market, leveraging the existing business of Kenafric Manufacturing Limited.
Strategic Expansion into Kenya
Relaxo Footwears Limited’s Board of Directors has approved a proposal to establish a footwear manufacturing, marketing, sale, and distribution facility in Kenya. This expansion will be undertaken through a joint venture with the Kenafric Group, forming a new entity named Relaxo Kenafric Footwears Limited (“RKFL”), incorporated under Kenyan law.
Investment and Shareholding
Under the proposed Share Subscription and Shareholders Agreement (“SSHA”), Relaxo Footwears Limited will subscribe to equity shares of RKFL for a cash consideration of up to ₹35.70 Crore. This investment represents a 51% stake in RKFL, making it a subsidiary of the Company upon completion. The Kenafric Group will hold the remaining 49% stake.
Ancillary Agreements
In conjunction with the joint venture, several definitive agreements have been approved, including:
- Share Subscription and Shareholders Agreement (SSHA): Outlining the terms of the joint venture, shareholding structure, and governance.
- Asset Transfer Agreement (ATA): Where the Company will transfer identified movable assets and assign customer/supplier contracts to RKFL.
- Intellectual Property Licensing Agreement: Where the Company will license certain trademarks to RKFL.
- Business and Asset Transfer Agreement (“KML BATA”): Kenafric Manufacturing Limited (KML) will transfer its footwear business to RKFL as a going concern.
Rationale and Impact
This strategic investment aligns with Relaxo’s objective to broaden its international reach and enhance its market presence in Africa. The joint venture will combine the Company’s brand and expertise with Kenafric Manufacturing Limited’s existing operations in Kenya, creating a local platform for the footwear business. The transaction is expected to be completed within 60-90 days, subject to regulatory approvals. The proposed transaction will not impact the management and control of Relaxo Footwears Limited.
Source: BSE
