Electrical equipment maker Crompton Greaves Ltd, part of Gautam Thapar-promoted Avantha Group, said on Thursday it has decided to sell its entire stake in an equal joint venture to its UK-based partner W Lucy & Co Ltd for Rs 40.26 crore ($6.2 million).
The decision to sell the stake in CG-Lucy Switchgear Ltd is a part of Crompton's strategy to focus on its B2B activity for high-voltage power equipment, the company said in a stock exchange filing.
The deal comes barely a fortnight after another Avantha Group firm, paper company Ballarpur Industries Ltd, agreed to sell its entire stake in loss-making Malaysian unit Sabah Forest Industries Sdn to Pandawa Sakti (Sabah) Sdn Bhd, Malaysia, for an enterprise value of $500 million.
The group has been facing a debt overhang and has divested several assets in the recent past. In April, the group inked a deal to sell its 34.3 per cent stake in the consumer products business of Crompton Greaves to a special purpose vehicle created by PE firm Advent and Singapore government's investment arm Temasek for Rs 2,000 crore.
Laurent Demortie, Crompton's CEO and MD, said the latest deal will allow CG-Lucy to focus on developing products specifically for the Indian market and expand its portfolio of medium-voltage equipment. Richard Dick, chairman of Lucy Group, said the deal will allow the company to bring its knowledge of automation systems for smart grids in India.
The JV was formed in 1994 and makes ring main units (RMUs) for India at its factory in Nasik. Crompton Greaves will keep distributorship of RMUs in the country after the deal and will also continue to supply vacuum bottles and other products to CG-Lucy.
Avantha Group also runs India’s largest paper company Ballarpur Industries and electricity generation company Avantha Power. Besides, it has several small and medium-sized companies in processed food, IT and chemicals sectors.
Shares of Crompton Greaves closed 0.5 per cent higher at Rs 179.25 each in a weak Mumbai market on Thursday.