Cable and wire manufacturer Polycab India Limited (PIL) has inked an agreement with Trafigura Pte Ltd of Singapore to buy 50% stake in Ryker Base Private Limited (Ryker), thereby terminating the existing joint venture (JV). The purchase consideration is likely to be around $4 million (Rs 30 crore).
The Indian firm had entered into a 50:50 joint venture with Trafigura in 2016 to incorporate Ryker to strengthen backward integration of its operations and improve quality of its key input copper.
Post Trafigura's global strategic decision to exit from value-add manufacturing businesses in India where it is a joint venture partner, PIL decided to acquire balance 50% stake in Ryker from Trafigura making Ryker a wholly owned subsidiary of PIL.
As of March 31, 2020, Ryker had Rs 197 crore 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.
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."
Share of Polycab India closed 4.84% or 33 points higher at Rs 723.70 on Friday as compared to the previous close of Rs 690.30.
Total 0.25 lakh shares changed hands amounting to turnover of Rs 1.80 crore on BSE. The stock hit an intraday high of Rs. 724.8 and intraday low of 711.
Polycab India made its stock market debut on April 16 last year. The stock rose 20 percent as the electric wires and cables maker raised Rs 1,346 crore in its initial public offering (IPO).
Shares of the company opened at a premium of 18 percent to the issue price of Rs 538. The stock closed at Rs 655, up 21.75 per cent with respect to its issue price.