Saregama India will demerge its entire distribution business relating to sale of all its physical products including carvaan on digital marketplaces alongwith identified non-core assets (including investments in publication business) and other activities and/or arrangements incidental or relating thereto ("e-commerce distribution business").

No cash consideration is payable under the proposed demerger scheme. The existing shareholders will receive 2 fully paid up equity shares of Digidrive Distributors, for 1 equity share of Saregama India.

Further, Saregama India is currently in process of seeking its shareholders approval for splitting 1 equity share to be sub-divided into 10 equity shares of face value of Re 1 each. In case the stock split is approved by the shareholders, the share entitlement ratio for the proposed demerger would be, 1 equity share of Rs 10 each of Digidrive Distributors, for every 5 equity share of Re 1 each of Saregama India.

The equity shares of Digidrive Distributors will be listed on the BSE and the National Stock Exchange of India.

The turnover of the e-commerce distribution business in the financial year ended 31st March 2021 was Rs 17.42 crore, which was 3.78% to the total turnover of Saregama India.

Saregama India said that online marketplace has considerable potential, and skills acquired by the company in the recent past can be utilized to manage end-to-end distribution activity, and with a potential to add many more products. This will also benefit Saregama India's business, as the negotiation strength generated by the distributors by selling a suite of products will help accelerate carvaan sales too.

Besides unlocking the value for the shareholders, the demerger will enable focused growth strategy for each of the businesses for exploiting opportunities specific to each business, it said in a statement. The demerger will provide investors with better flexibility to select investments which best suit their investment strategies and risk profile, it added.

Saregama India owns the largest music archives in India, one of the biggest in the world. The ownership of nearly 50% of all the music ever recorded in the India also makes Saregama the most authoritative repository of the country's musical heritage. Saregama has also expanded into other branches of entertainment – publishing, film production and digital content.

On a consolidated basis, the company's net profit rose 37.43% to Rs 43.40 crore on 12.27% increase in net sales to Rs 150.34 crore in Q3 December 2021 over Q3 December 2020.