Decoding Demerger: How Race Eco Chain’s Divvying Up Poised to Fuel Future Wins

Image Source: Race Eco Chain

Race Eco Chain Limited has taken a significant corporate restructuring step by approving a scheme of arrangement to demerge two of its key business divisions into separate listed entities, enhancing its strategic focus and unlocking shareholder value. The Board meeting was held on Wednesday, September 10, 2025, at 2:30 p.m., where the company sanctioned the proposed scheme in compliance with relevant Companies Act and Income Tax Act provisions.

Key Highlights of the Demerger Approval

The company proposes to demerge its Biomass Division into a new entity, GeoEco Green Energy Limited (Resulting Company No. 1).
Simultaneously, the Restore Bag Division will be demerged into another separate entity, Race Gateway Limited (Resulting Company No. 2).
Both resulting companies will issue equity shares to the existing shareholders of Race Eco Chain Limited based on a predefined share exchange ratio.
The scheme aims to streamline operations by allowing the divisions to operate as focused, independent companies aligned with their respective business dynamics.
Both Resulting Companies plan to seek listing on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) to enable transparent market access for shareholders.

Demerged Divisions and Their Business Scope

Race Eco Chain Limited operates as a diversified player primarily engaged in waste management, with multiple business verticals including:
The Biomass Division specializing in trading briquettes formed from waste materials such as coconut shell, sunflower, mustard, and groundnut biomass.
The Restore Bag Division focused on trading cloth bags, bed sheets, and related home furnishing textile products.
Other operational verticals include the Recycle Division dealing with used/waste PET bottles and parts, alongside additional waste and unallocable business activities.
The scheme isolates the Biomass and Restore Bag Divisions as separate undertakings to be transferred to the newly formed GeoEco Green Energy Limited and Race Gateway Limited, respectively, on a going concern basis, thereby maintaining continuity of operations during and after the demerger.

Financial Snapshot of Demerged Businesses (FY 2024-25)

Biomass Division posted a turnover of Rs 18.71 crore, which contributed around 4.06% to the total turnover of Rs 460.30 crore for the parent company.
Restore Bag Division registered a turnover of Rs 8.94 crore, making up 1.94% of Race Eco Chain’s consolidated turnover.
The combined contribution of these two divisions to the overall business revenue signals their nascency with substantial growth potential as stand-alone listed entities.

Rationale Behind the Demerger

The Biomass and Restore Bag divisions have matured sufficiently to embark on independent growth trajectories tailored to their specific industry needs within the broader waste management ecosystem.
Operating as focused listed entities allows each business to execute differentiated strategies aligned with sector-specific market dynamics.
Such structural clarity will enable attracting specialized investors and strategic partners whose investment profiles align with the unique opportunities in biomass energy and textile recycling markets.
The demerger is expected to unlock shareholder value by enhancing transparency, operational efficiency, and responsiveness to market conditions.

Share Exchange Ratio and Consideration

For every 214 shares held in Race Eco Chain Limited, shareholders will receive 267 fully paid equity shares in GeoEco Green Energy Limited.
For every 200 shares held, shareholders will also be allotted 206 fully paid shares in Race Gateway Limited.
Shares to be issued by the Resulting Companies will reflect the full paid-up status and will be credited without requiring any further application or deed from shareholders.

Listing Plans of Resulting Entities

Both GeoEco Green Energy Limited and Race Gateway Limited will seek listings for their existing and newly issued equity shares on the BSE and NSE. This move will provide liquidity and access to capital markets for the shareholders of the newly demerged entities, ensuring transparency and market-driven valuation.

Implications for Stakeholders

Shareholders will gain direct stakes in the distinct businesses, allowing them to benefit from focused growth prospects in biomass energy and textile-related waste management.
Employees and creditors stand to benefit from clearer organizational structures optimized for growth and operational excellence.
The company anticipates attracting niche investors aligned with industry-specific dynamics, potentially improving valuation multiples and capital efficiency.

Race Eco Chain Limited continues to demonstrate its commitment to maximizing stakeholder value through strategic business realignments. This scheme marks an important milestone in its journey as a pioneer in India’s waste management sector, driving sustainability while unlocking new avenues for growth through focused business entities.

Source: Company disclosure to the Stock Exchanges