Polycab India has signed an agreement to divest its entire shareholding in its wholly-owned subsidiary Ryker Base Pvt Ltd.
The agreement has been signed with Renuka Investments & Finance Ltd, a wholly-owned subsidiary of Hindalco Industries Ltd.
The enterprise value of the deal is around Rs.323 crore. Post debt and working capital adjustments, the sale consideration is likely to be around Rs.167.50 crore.
The transaction is expected to be completed by end-December 2021, Polycab India said in a release, adding that the deal is subject to fulfillment of certain conditions by both parties as well as applicable customary approvals.
Will continue association
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.
Also read: Polycab India Plans Rs.300 Crore Capex In FY21
Tolling agreement
According to Inder T. Jaisinghani, Chairman & Managing Director, “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.
Erstwhile JV
According to information available with T&D India, Ryker Base Pvt Ltd was formed as an equal joint venture between Polycab India and Singapore-based Trafigura Pte Ltd, in late 2016. In around May 2020, Polycab decided to buy out Trafigura’s entire equity stake, thereby making Ryker Base a wholly-owned subsidiary of Polycab India Ltd.
Featured photograph shows an overview of Ryker Base’s manufacturing facility at Vadodara in Gujarat.
