Aditya Birla Nuvo divests its Carbon Black business for Rs. 1,451 Crore
6th April 2013
Considering that multi-national tyre manufacturers prefer to engage with carbon black players having global delivery capabilities – to benefit from consistency in quality, supply assurance and R&D support – the scale and global positioning in the Carbon Black sector has become increasingly important.
Aditya Birla Nuvo's Carbon Black manufacturing operations are located only in India and account for merely 2% of global industry capacity. Besides, in view of Nuvo's capital commitments towards funding the growth of other businesses, it is challenging for the Company to become a global Carbon Black player.
Hence the Company, in its committee meeting held on 6th April 2013, has decided to divest the carbon black business at an Enterprise Value of Rs. 1,451 Crore.
The cash inflow from the divestment of the Carbon Black business will be utilised to reduce the debt and strengthen the balance sheet of the Company. This will support the Company's growth plans and ensure greater focus in other businesses. ABNL has growth plans in other businesses particularly in the Financial Services and Agri businesses.
The Carbon Black business is being transferred, on a going concern basis, by way of a slump sale, to SKI Carbon Black (India) Private Limited, an Aditya Birla Group Company.
The valuation has been carried out by M/s Deloitte Touche Tohmatsu India Private Limited. The transaction is expected to be consummated during the first quarter of the current financial year. This would, however, be subject to requisite approvals including shareholders approval.