German group to pay Rs 260 crore
KOLKATA/MUMBAI: ICI India has decided to sell its adhesives business to the Indian affiliate of the Germany’s Henkel group for Rs 260 crore, subject to agreed adjustments for working capital and cash balances.
The sale follows the purchase of ICI India’s parent company ICI UK by Akzo Nobel NV in January 2008 and the acquirer’s decision to sell ICI’s global adhesives and electronic material business to Henkel AG.
ICI India’s board of directors at a meeting on Friday recommended the sale.
The adhesives business of ICI India is closely integrated with the global adhesives business of the ICI group and given the interdependency, the Board believes it will be in the interest of shareholders, employees and customers that the India business is also divested to the Henkel group.
According to the company, the business proposed to be transferred to the Henkel group will include its portion of Thane manufacturing facility, about 120 employees and the company’s shareholding in its subsidiary Polylinks Ltd. The transaction is likely to be completed in the second half of 2008, after obtaining the approval of ICI India shareholders.
ICI India’s adhesives business revenues for the fiscal ended March 31, 2007 stood at Rs 135 crore. The company has a 67% stake in Polyinks Ltd, which has a manufacturing facility at Hyderabad and is in the process of setting up a new plant at Rudrapur, Uttarakhand.
Repeated attempts to reach Rajiv Jain, managing director of ICI India and Hina Nagarajan, general manager, marketing & innovation, failed.
In a statement, ICI said Polyinks Ltd had a net sales turnover of Rs 14 crore for the year ended March 31, 2007.
It is expected that the company would see a change in name and board composition now that a decision on the sale of the adhesives unit has been taken.
ICI India has a paints business of around Rs 800 crore and non-paints portfolio around Rs 150-200 crore. With a robust decoratives portfolio, the combined entity with Akzo, which is strong on the industrial front, would catapult it to a firm footing in the likes of Berger Paints and Kansai Nerolac.
ICI, which is in the midst of a buyback, has kept aside Rs 250 crore for a 10% equivalent buyback and dividend. ICI Plc holding in the Indian company is around 54%. On completion, ICI Plc’s stake in the Indian subsidiary is expected to be around 58-59%. The market operation is valid till July 2008.
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