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Aditya Birla Nuvo to divest Carbon Black Business for Rs 1,451 crore

08 Apr 2013 Evaluate

Aditya Birla Nuvo will be divesting the company’s Carbon Black Business, on a going concern basis, by way of slump sale to SKI Carbon Black (India), an Aditya Birla Group Company, for a lumpsum consideration of Rs 1,451 crore as enterprise value. This is on the basis of an independent valuation carried out by Deloitte Touche Tohmatsu India, Mumbai.

The cash inflow from the divestment of the Carbon Black business will reduce debt and strengthen the company’s balance sheet. This will support growth plans and ensure greater focus on the other businesses of the company.

The company has taken the above step pursuant to the meeting of Committee of Directors held on April 06, 2013, where they had reviewed the carbon black business scenario both in the Indian and the global context. Given that multi-national tyre manufacturers prefer to engage with carbon black players that have global delivery capabilities, scale and global positioning in the Carbon Black sector has become increasingly important. The company’s carbon black business, by itself, accounts for merely 2% of the global industry capacity.

Moreover, in view of the company’s capital commitment towards funding the growth of its other businesses, it is extremely challenging for the company to become a global Carbon Black player.

Peers
Company Name CMP
Grasim Industries 3143.55
DCM Shriram 1037.30
3M India 36476.35
Hindustan Foods 570.75
Balmer Lawrie & Co 179.40
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