India’s largest paints company Asian Paints Ltd is investing Rs 120 crore ($19.7 million) as part of a deal to buy a 51 per cent stake in Sleek International Pvt Ltd, one of the top kitchen solutions provider in the country. The deal was announced early this year but the firm had not disclosed the value back then.
The investment was approved by Asian Paints’ board on Thursday, the company disclosed in a stock exchange notification.
The money is invested in two tranches of which the first was completed on Thursday through an infusion of Rs 99.78 crore for subscription to equity shares of Sleek. With this, the firm picked 51 per cent in Sleek, valuing it at Rs 195.6 crore.
Asian Paints is also infusing Rs 19.69 crore more this week, as a second tranche to the transaction by further subscription to equity shares with a corresponding proportionate infusion by the existing promoters of Sleek. The Ahuja family, the current promoters of the company, will retain the balance 49 per cent stake.
Rajesh T Ahuja, the current CEO, will continue to be the managing director and CEO while Monesh T Ahuja will continue as the executive director of the joint venture.
Asian Paints will nominate two non-executive directors on the board of the joint venture and one of these nominees will be the chairman.
The company believes that this acquisition will be a strategic fit both with its current business as well as other lines of home improvement businesses that may be added in the future. It said the modern kitchen space has only a few organised pan-India players and is growing rapidly.
"The engagement with the Sleek management over the last few months has reaffirmed our faith in the business and the opportunity of growth and synergy that it offers us. This is also the first step in our strategic foray in the home improvement space,'' said KBS Anand, MD and CEO, Asian Paints.
Mumbai-based Sleek Group is into the business of manufacturing, selling and distributing kitchen components including wire baskets, cabinets, appliances and accessories, with a pan-India presence. It has a retail network of more than 30 showrooms, including shop-in-shops and a network of over 250 dealers. According to the company website, Sleek installs 25,000 kitchens annually, in India and overseas.
Last year in March, Reliance Equity Advisors Ltd invested $20 million for a 13.7 per cent stake in kitchen appliances maker Butterfly Gandhimathi Appliances Ltd.
In December 2011, French home appliance maker Groupe SEB acquired a 55 per cent in Maharaja Whiteline, a privately held electrical appliance maker based in Delhi. Before that, Philips, one of the top players in the organised sector, had acquired Maya Appliances that sells its products under the Preethi brand.
In 2010, Stovekraft Pvt Ltd, a kitchen appliances company with brands like Gilma and Pigeon, had raised funding from Sequoia Capital India and Sidbi Venture Capital.
(Edited by Joby Puthuparampil Johnson)