SRF to sell engineering plastics business to Dutch firm DSM
May 13, 2019
Speciality chemicals maker SRF Ltd has agreed to sell its engineering plastics business to the Indian unit of Dutch multinational Royal DSM for Rs 320 crore ($45.6 million).
The sale will strengthen the company’s balance sheet and allow it to focus its resources on developing newer technologies for the chemicals business, SRF said in a stock-exchange filing.
The sale to DSM India Pvt. Ltd is likely to be concluded with six months, SRF said. The final transaction value is subject to working capital adjustments, it added.
The engineering plastics division’s main operations are based in Pantnagar, Uttarakhand. The business earned revenue of Rs 209 crore for 2017-18, representing 4.5% of SRF’s turnover, the filing said.
SRF was founded in 1970 and has operations in India, Thailand and South Africa. It posted total revenue of Rs 1,647.60 crore for the quarter ended December 31, 2018.
The company classifies its business into three main verticals – technical textiles, chemicals and polymers, and packaging films. It says it has commercial interests in over 75 countries, with a global workforce of 6,500 people.
DSM India is a subsidiary of the Netherlands-based Royal DSM, or Koninklijke DSM NV. According to its website, the group operates in the human and animal nutrition, medical devices and personal care segments. It reported net sales of €2.3 billion (about Rs 18,075 crore at current exchange rates) for the first quarter of 2019.
In a separate statement, Royal DSM said the deal will help the India unit expand production and sales of its speciality materials without having to make significant capital expenditure.
DSM has about 550 employees in India. It is active in both nutrition and materials segments in the country. The company’s engineering plastics division operates a compounding facility and a research and training centre in Pune. In 2018, DSM’s total sales in India amounted to about €250 million ($281 million), an increase of 17% compared to 2017.
By Narinder Kapur