Beauty e-commerce giant Nykaa has announced a significant restructuring of its business divisions.
The company’s board has given the green light for parent FSN E-Commerce to acquire the western wear and accessories business of Nykaa Fashion Limited for a cash sum of INR 133.7 Cr.
The company stated in a regulatory filing with the BSE that the Board has sanctioned the acquisition of Nykaa Fashion Limited’s western wear and accessories business as a going concern on a slump sale basis. This acquisition will be carried out in accordance with the business transfer agreement between the company and the transferor company.
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According to Nykaa, the decision to transfer the western wear and accessories business to Nykaa Limited aligns with their strategy to streamline and centralize owned brand operations within one entity. The transaction is anticipated to finalize by September 2024.
In addition, Nykaa obtained board approval to integrate its content delivery subsidiary, Little Black Book (LBB), with Nykaa Fashion. Initially, it disclosed the transfer of its entire ownership in LBB’s parent company, Iluminar Media, to Nykaa Fashion. Shortly thereafter, the board granted its preliminary consent to merge LBB with Nykaa Fashion.
According to the company, the stake transfer will be finalized by December 2024.
The transactions concerning Nykaa Fashion and LBB will require approval from various parties, including the National Company Law Tribunal (NCLT) and the company’s shareholders.
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In a filing, Nykaa stated, “The Scheme of Amalgamation will be presented to the Boards of both companies for approval at an appropriate juncture and will be contingent upon obtaining necessary endorsements from the National Company Law Tribunal, shareholders, creditors of both entities, and any other requisite regulatory clearances.”
This development comes as Nykaa released its financial results for the quarter ended March 2024. The beauty ecommerce major experienced a significant downturn in its consolidated net profit, plummeting by nearly half (48% to be precise) sequentially to INR 9.07 Cr in Q4 FY24 from INR 17.45 Cr in the previous quarter.
However, on a year-on-year (YoY) basis, profits surged by 1.2 times from INR 4.27 Cr in Q4 FY23.
At the same time, there was a 6% quarter-on-quarter decline in operating revenue, amounting to INR 1,667.9 Cr in Q4 FY23; however, there was a notable 28% year-on-year increase.
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The restructuring coincides with the company’s announcement of an additional 4.05 lakh stock options under its Employee Stock Option Policy (ESOPs) scheme, which was made public just a day before the Q4 results.
The results were announced shortly after the markets closed on Wednesday. Nykaa’s stock ended the day nearly 1% higher at INR 179.05 on the BSE.