Private equity major Actis is going to buy out the general lighting business of Halonix (formerly Phoenix Lamps) after hiving it off from the firm, turning Halonix into a focused automotive lighting firm. The valuation of the general lighting business will be based on higher of the two independent valuers PricewaterhouseCoopers and SSPA & Co Chartered Accountants.
The move will separate the loss-making general lighting business from the firm that has been a drain on resources for Halonix. As a part of the deal, the company will first hive off the general lighting business into a subsidiary Halonix Technologies and then sell shares of the subsidiary to Actis.
Actis owns 66% in Halonix (since 2007), buying a majority stake in one of the rare control deals in the Indian private equity space. Going forward, one possible option for Actis could be to sell the general lighting business, after turning it around, to some strategic player as it is a low margin business which may not find many takers for a public offer.
Halonix is in the business of making halogen lamps for automobiles including two & three-wheelers, passenger cars, commercial vehicles & off-road applications. It is also in the business of branded general lighting, mostly compact fluorescent lamps (CFL), which consume one-fourth of the energy as the normal bulbs and have a longer life.
For the year ended March’09, the company derived as much as 52% of its Rs 442 crore revenue from non-automotive lamps which is now proposed to be hived off into the wholly-owned subsidiary. This business had negative EBITDA of Rs 33.6 crore compared to positive operating earnings of Rs 50 crore for automotive line. Net loss of over Rs 50 crore overshadowed positive earnings of the other business pulling the overall company into losses.
General lighting business has three plants spread across Noida, Dehradun and Haridwar employing 1,350 people.
JM Trivedi, South Asia Head of Actis, had earlier told VCCircle: “This is a value unlocking move (for all the shareholders). Halonix board decided on subsidiarization of the general lighting and branded unit, which will only enhance the value of the automotive lighting business. While automotive lighting is mature and profitable, the general lighting is young, growing and not so profitable.”
VCCircle, in February this year, was the first to report on the possible restructuring at Halonix. The company had last year roped in Wipro Lighting veteran Rajesh Kochhar as its new managing director.