New Delhi: Polycab India Limited (PIL) announced today that it has signed an agreement with Trafigura Pte Ltd, Singapore (Trafigura) to acquire 50% stake in Ryker Base Private Limited (Ryker) thereby terminating the existing joint venture (JV).
PIL had entered into a 50:50 JV with Trafigura in 2016 to incorporate Ryker with an aim to strengthen backward integration of its operations and improve quality of its key input i.e., copper. Post Trafigura’s global strategic decision to exit from value-add manufacturing businesses in India where it is a JV partner, PIL decided to acquire balance 50% stake in Ryker from Trafigura making Ryker a wholly owned subsidiary of PIL.
The purchase consideration is likely to be around US $ 4 Million (Rs 300 million)1. As of 31st March 2020, Ryker had Rs 1.97 billion 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 MT and commenced its commercial production in FY20.
The facility uses state of the art technology to consistently outperform global quality benchmarks, consumes less energy and is significantly lower on carbon emissions. 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.
Inder T. Jaisinghani, Chairman & Managing Director of Polycab said, “This strategic buyout reflects Polycab’s unwavering focus on strengthening its core while readying the business for its future. Enhanced control on our manufacturing operations will generate operational efficiencies and help us deliver better quality products to our consumers. I am confident that this deal will fortify Polycab’s market position in the Electricals space and create great value for all its stakeholders.”
