Sudhir Jatia, former managing director of VIP Industries, has struck a deal to acquire a majority stake in public-listed domestic luggage products firm Safari Industries (India) Ltd for Rs 29 crore ($6.2 million).
Jatia had quit as managing director of Dilip Piramal Group’s flagship VIP Industries (the world’s second largest luggage products maker in early 2010) to pave the way for Radhika Piramal, the next-generation leader of the promoter family. He had also left the company’s board early this year.
In the latest transaction, he is acquiring 56.55 per cent from the promoters, who held 53.79 per cent stake in Safari as of June 30. The deal has been struck at Rs 170 per share or 18 per cent premium to the closing price on Monday.
Safari Industries scrip shot up almost 10 per cent on Tuesday after the announcement to hit the upper circuit for the day at Rs 158.45 a share on the BSE. Its scrip has more than doubled after hitting a 52-week low of Rs 67.15 a share in February this year.
The deal will also trigger a mandatory open offer for further 25 per cent stake as per the new takeover norms. This will cost Jatia up to Rs 12.7 crore in addition.
Safari Industries had revenues of Rs 72.3 crore, with net profit of Rs 2.65 crore for the year ended March 2011. The company produces plastic moulded luggage and has a manufacturing unit at Halol in Panchmahal district, close to Baroda (Gujarat).
It has an installed capacity to manufacture over 90,000 pieces of moulded luggage per month, while soft luggage is outsourced. The company employs around 1,000 people, according to its website.
In this venture, Jatia will be leading one of the small players in the business, compared to the two giants – VIP Industries and Samsonite. VIP is the biggest player in the domestic market and clocked revenues of Rs 760 crore, with net profit of Rs 88.7 crore for the year ended March 2011. Samsonite is the world’s largest firm in the luggage business, but trails VIP in India.
Incidentally, Sudhir Jatia is among the largest non-promoter shareholders of VIP Industries. As of June 30, he held 6.02 per cent in the company. Ace investor Rakesh Jhunjhunwala is also among the shareholders of the company.