Galactico Sells Beverage Unit for ₹6.68 Cr to Meet SEBI Norms

Introduction

Galactico Corporate Services Limited has announced a significant strategic shift, with its board approving the divestment of its majority stake in a non-core subsidiary. In a meeting held on March 14-15, 2026, the board sanctioned the sale of its 73.77% holding in Seven Hills Beverages Limited for a consideration of ₹6.68 crore. This move is aimed at sharpening the company's focus on its primary merchant banking operations and ensuring compliance with stringent new capital requirements mandated by the Securities and Exchange Board of India (SEBI).

The Strategic Divestment

The decision to sell the stake in Seven Hills Beverages, an unlisted entity manufacturing packaged drinking water for Bisleri International, marks a pivotal step in Galactico's corporate strategy. The transaction is designed to unlock capital and streamline the company's business structure, allowing management to concentrate resources on its financial advisory and merchant banking services. The company has set a target to complete the sale, which is subject to shareholder approval and other conditions, by April 25, 2026. The proceeds are expected to directly bolster Galactico's balance sheet and improve its liquidity position ahead of critical regulatory deadlines.

Navigating New SEBI Regulations

The divestment is directly linked to the SEBI (Merchant Bankers) Amendment Regulations, 2025, which came into effect on January 3, 2026. These updated regulations replace the older 1992 framework and impose stricter capital and liquid net worth requirements on merchant bankers. To comply, Galactico's board has mandated that the company achieve a liquid net worth of at least ₹2.00 crore by December 31, 2026. This is the first of several milestones, with future targets set at ₹25 crore by 2027 and ₹50 crore by 2028 to maintain its Category I merchant banker status. The sale of the beverage unit is a crucial first step toward meeting these enhanced financial thresholds.

Financial Health and Performance

The strategic realignment comes at a time of mixed financial performance for Galactico. For the third quarter ending December 31, 2025 (Q3FY26), the company reported an increase in consolidated revenue but a significant drop in profitability. This highlights the challenges in its diversified business model and underscores the rationale for focusing on its core, higher-margin activities.

On a standalone basis, which primarily reflects the merchant banking business, revenue grew to ₹1.09 crore from ₹0.77 crore year-on-year, but profit after tax fell sharply to ₹0.12 crore from ₹0.47 crore.

Broader Corporate Restructuring

This divestment is part of a broader overhaul at Galactico. In a board meeting on February 25, 2026, the company had already proposed a corporate restructuring to segregate its non-SEBI regulated activities from its core merchant banking operations. This involves creating 'Chinese wall' arrangements to ensure an arm's-length basis between different business units, a key requirement under the new SEBI framework. In a separate decision during the March meeting, the board also approved the conversion of ₹12.00 crore in unsecured debentures into secured Optionally Convertible Redeemable Debentures (OCRDs), further strengthening its capital structure.

Key Risks and Path Forward

Galactico's path ahead involves navigating several key risks. The foremost is regulatory adherence; failing to meet the ₹2.00 crore liquid net worth target by the end of 2026 could jeopardize its merchant banking license. Furthermore, the successful completion of the Seven Hills Beverages sale is contingent on shareholder approval and fulfilling all contractual obligations by the April 25, 2026 deadline. The company's long-term success will depend on its ability to execute this strategic pivot efficiently and meet the progressively increasing net worth requirements set by SEBI for the coming years.

Conclusion

Galactico Corporate Services is undertaking a decisive transformation by divesting its non-core beverage business to fortify its financial position and align with new regulatory standards. The ₹6.68 crore sale is a critical move to enhance liquidity and concentrate on its merchant banking expertise. The company's immediate focus will be on securing shareholder approval for the divestment and systematically working towards the mandated net worth targets to secure its future as a Category I Merchant Banker.