Leading electricals brand Polycab India Ltd (PIL) said on Saturday it has signed an agreement with Trafigura Pte Ltd of Singapore to acquire 50 per cent stake in Ryker Base, thereby terminating the existing joint venture (JV).
PIL had entered into a 50:50 joint venture with Trafigura in 2016 to incorporate Ryker with an aim to strengthen backward integration of its operations and improve quality of its key input copper.
Post Trafigura's global strategic decision to exit from value-add manufacturing businesses in India where it is a joint venture partner, PIL decided to acquire balance 50 per cent stake in Ryker from Trafigura, making Ryker a wholly-owned subsidiary of PIL.
The purchase consideration is likely to be about Rs 30 crore, PIL said in a statement.
As of March 31, Ryker had Rs 197 crore of external commercial borrowing availed earlier for funding the cost of the plant which will now be fully consolidated in PIL. The transaction is subject to fulfilment of certain conditions by both parties.
Copper is an important element of Polycab's business and is used extensively in wires, cables as well as most of FMEG products. Ryker is involved in manufacturing of copper wire rods with a total annual capacity of 225,000 tonnes and started its commercial production in FY20.
The transaction will further allow PIL to have complete control of Ryker's manufacturing operations. While PIL's internal requirements are likely to consume about half of Ryker's capacity over medium term, the balance will be utilised through various tolling or partnership opportunities.
Currently, India is a net importer of refined copper and value-added copper products due to the huge supply gap. Ryker is well placed to service this demand.
"This strategic buyout reflects Polycab's unwavering focus on strengthening its core while readying the business for its future," said Chairman and Managing Director Inder T Jaisingh.
"Enhanced control on our manufacturing operations will generate operational efficiencies and help us deliver better quality products to our consumers," he said.
PIL is a leading electricals brand with nearly Rs 8,000 crore revenue. It is the largest manufacturer of wires and cables in India and a fast-growing player in the FMEG space.
The company manufactures and sells various types of cables, wires, electric fans, LED lighting and luminaires, switches and switchgears, solar products, pumps and conduits, and accessories.
( With inputs from ANI )