Ess Dee Aluminium (EDAL), a packaging firm, has acquired 90% stake in Kolkata-based aluminium foils maker India Foils from the Anil Agrawal led Vedanta group. The stake in the ailing India Foils will be acquired for a sum of Rs 130 crore. The sale of of India Foils has been approved by Board for Industrial & Financial Reconstruction (BIFR), which was overlooking the revival of the firm.
Ess Dee raised Rs 81 crore in private equity from Morgan Stanley in September last year, selling a 5% stake. On Friday, US-based hedge fund Apis Capital also bought a 2.27% stake in the firm for around Rs 9 crore. After the news of of finalisation of deal came out yesterday, the share price of Ess Dee shot up by 9%.
Under the deal Ess Dee will buy 52% stake through subscription of fresh shares, while the rest 38% would be by purchase of Madras Aluminium Company's (MALCO) stake. MALCO will also assume the Rs 240 crore debt of India Foils to various financial institutions. Vedanta had put India Foils under the purview of BIFR in 2005 following erosion in networth of the company.
India Foils has fixed assets of Rs 400 crore and sales of Rs 250 crore. In its Q2 results, Ess Dee showed a 67% increase in net profits and posted earnings of Rs 6.84 a share for the quarter.
Ess Dee, which is headed by first generation entrepreneur Sudip Dutta, now plans to turnaround India Foils.
Ess Dee will double its manufacturing capacity, from 18,000 tonnes to 37,000 tonnes, with this acquisition and is also planning overseas acquisitions. Last year its was reported that the company is preparing a Rs 600 crore warchest for acquisitions.