Polycab divests 100% stake in Ryker Base Pvt. Ltd.

Polycab India Limited (PIL) has signed an agreement with Renuka Investments and Finance Limited, a wholly owned subsidiary of Hindalco Industries Limited, to divest the entire equity shareholding in Ryker Base Pvt. Ltd. (Ryker). Ryker was a wholly owned subsidiary of PIL. The enterprise value is pegged at Rs 3,230 mn. Post debt and working capital adjustments, the sale consideration is likely to be around Rs.1,675 mn. Consolidated debt in PIL financials is likely to reduce by about Rs1,575 mn which pertains to external commercial borrowing and working capital loan of Ryker. The transaction is expected to be completed by December end and is subject to fulfilment of certain conditions by both parties as well as applicable customary approvals.

Ryker played a strategic role by manufacturing and supplying copper wire rods which is a key input for manufacturing wires and cables. However, considering the suboptimal utilisation of capacities and focus on core business, PIL decided to exit this venture. Furthermore, in order to ensure PIL's strategic agenda of having robust visibility over its key input remains protected, the company has agreed to enter into a multi year tolling arrangement with Hindalco where Ryker will continue to process and supply high quality copper rods to PIL at mutually beneficial commercials.

Inder T. Jaisinghani, Chairman & Managing Director of Polycab said, "Ryker facility uses state of the art technology and is a great asset. After exploring various strategic options we believe this deal is a win-win proposition as the multi year tolling arrangement will ensure our supply chain dynamics remain intact and we continue to deliver highest quality of products to our customers. It also reflects our enduring focus on disciplined and optimal capital allocation while safeguarding our business interests. Additional financial resources will be utilised to intensify growth and make Polycab a formidable player in electricals space."

Shares of Polycab India Limited was last trading in BSE at Rs. 2391.35 as compared to the previous close of Rs. 2337.70. The total number of shares traded during the day was 22870 in over 3805 trades.

The stock hit an intraday high of Rs. 2402.00 and intraday low of 2350.05. The net turnover during the day was Rs. 54596612.00.

Source : Equity Bulls

Keywords

PolycabIndiaLimited INE455K01017 POLYCAB SaleofBusiness Ryker HindalcoIndustries