Mandhana’s shares fall 60 per cent due to a tiff with Salman Khan

The speculation on Mandhana Industries’ reported differences with Bollywood actor Salman Khan’s charitable trust over the profit sharing terms for selling his branded clothing line has seen shares tumble 60 per cent last week. The stock was locked at its lowest circuit for at Rs 123 on the BSE.

The reason behind the difference is believed to be Khan’s demand for equal profit sharing or royalty, whichever was higher from Mandhana’s sale of Being Human branded products. Mandhana has a tie-up with Salman Khan Foundation for selling Being Human branded clothing line, for which 5 per cent royalty was paid to the trust. Being Human contributed around 10 per cent to the company’s sales in 2014-15. Mandhana was in the process of signing a new contract with the charitable trust. It will however be demerging its retail business to Mandhana Retail Ventures.

Being Human’s retail business grew by 96 per cent to Rs 172 crores. The margins from earnings before interest, depreciation, tax and amortisation through Being Human stood at 27 per cent compared to 12 per cent of Mandhana’s remaining businesses. Seeing high growth and profit, Mandhana promoters decided to demerge the retail business to unlock value. This prompted the actor’s trust to ask for a higher royalty and share of profits. Hence, rumours about a difference, which has already sent many investors into a tizzy.