V-Guard to pick up majority stake in GUTS Electro-Mech

Kochi-based electrical appliances manufacturer V-Guard Industries Ltd plans to pick a majority stake in domestic switch gears and current transformers maker GUTS Electro-Mech Ltd.

V-Guard Industries, which is backed by private equity firm Nalanda Capital, has already got the in-principle approval to make the investment in the Hyderabad-based company, it said in a stock market disclosure. It did not, however, disclose the financial details.

The investment is subject to completion of due diligence and obtaining the necessary regulatory approvals, it said.

V-Guard Industries, which was founded in 1997, manufactures electrical appliances. Its products include voltage stabilisers, water heaters, UPS, kitchen appliances and pumps.

The company's revenue rose to Rs 1,862.28 crore in the financial year ended 31 March 2016 from Rs 1,745.92 crore in the year-ago period. The growth in revenue was propelled by increased sales of fans, stabilisers, water heaters and pumps. It clocked a net profit of Rs 111.68 crore in the last financial year against Rs 70.72 crore in the previous year.

The firm expects its turnover to cross Rs 2,000 crore by end of the financial year ending 31 March 2017, according to its annual report 2016.

V-Guard Industries has the distinction of being one of the first companies to float an initial public offering (IPO) soon after the market crash in January 2008 at a time when various issues were postponed or had to be rolled back due to lack of investor interest.

Shares of the company closed at Rs 170.15 apiece on the BSE on Tuesday in a strong Mumbai market.

Nalanda Capital first picked a 2.2% stake in V-Guard Industries through open market purchases for about Rs 11.5 crore ($2.5 million) in March 2010.

The private equity firm, which invests in public equities, has since then raised its stake in the firm to 6.93% as on 31 December 2016, according to stock exchange data.

Another investment firm MCap Fund Advisors Pvt. Ltd, floated by former Baring Private Equity India partner Subbu Subramaniam that largely invests in public-listed companies, exited V-Guard Industries in early 2014.

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