Chemplast Sanmar to acquire chemical business in Egypt

Chemplast Sanmar Ltd has announced that the Sanmar Group has entered into an agreement to acquire, subject to due diligence and necessary approvals, a chemical business located at Port Said, Egypt. The business belonging to Trust Chemical Industries owns a Caustic Soda Plant with a capacity of 200,000 tonnes per annum, which commenced operations a little over a year ago. The plant also has facilities installed to manufacture chlorine-based products such as Hydrochloric Acid, Chlorinated Paraffin Wax, Sodium Hypochlorite, Ferric Chloride, etc. The Group will acquire the undertaking at a value of around USD 200 Mn.

On completing the acquisition, The Sanmar Group would evaluate the possibility of manufacture of further products at Port Said, such as Ethylene Dichloride (EDC) and Vinyl Chloro Monomer (VCM) using the chlorine available. This would however call for significant capital investments.

The Group intends to operate this as a separate business headquartered at Port Said, and is in the process of identifying a top management team for it.

The Group's existing chemical venture in India, the Company is currently involved in a significant capital expenditure programme towards conversion of the Caustic Soda facilities at Mettur to Membrane Process, installation of a coal-based power plant of 50 MW capacity at Mettur, and setting up a green field PVC manufacturing facility at Cuddalore with a capacity of 170,000 tonnes per annum based on bought-out VCM.

The Company's Board of Directors has approved, subject to compliance with all related formalities, the Company raising equity resources on rights basis (share capital and premium) not exceeding Rs 200 crores. The Company is in the process of filing draft offer documents with SEBI.

In the event EDC / VCM manufacture is taken up at Egypt, it could be a possible supply source for the Company in future, but such decisions will be taken on an ongoing basis depending upon the independent economics of both entities.

Engineering - Germany

The Sanmar Group has entered into an MOU to acquire, subject to due diligence, a majority stake in an engineering unit in Germany involved in SG Iron castings, and Design / Machining of Auto Components therefrom. The acquisition, if completed, will involve the Group acquiring 80% of the outstanding equity capital of the Company valued at Euro 16 Mn.

Advisors

The Group has appointed Ernst & Young Pvt Ltd to advise it on structuring the transaction, resource raising etc.

Source : Equity Bulls

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