Borosil Renewables Ltd. is the first and only solar glass manufacturer in India and part of the Borosil group which is well-known for the brand “BOROSIL” which manufactures a range of labware, scientific ware, and consumer ware products. It recently acquired 100% acquisition of two major German companies named lnterfloat Corporation and GMB (Glasmanufaktur Brandenbur).
- Interfloat Corporation and GMB (Glasmanufaktur Brandenbur) are the subsidiaries of the HSTG Glasholding and Blueminds IF Betegungs having 80% and 20% stakes respectively.
- GMB manufactures solar glass and Interfloat corporation sells these glasses to its customers. Interfloat is having industry experience for 40 years.
- To acquire Interfloat corporation and GMB, Borosil has approved the acquisition of a special purpose vehicle called Youco F22-H190 Vorrats.
- Youco F22-H190 Vorrats will manage and oversee the acquisition of these two entities.
- The main purpose of this acquisition is to strengthen the company’s abilities to supply products to its European customers and it will remove its biggest hindrance of export.
Process of Acquisition.
- Borosil acquires the Youco F22-H190 Vorrats for Rs. 23 lakhs.
- Now, with the medium of the Youco, Borosil will acquire the GMB and Interfloat Incorporation.
- Youco holds and controls a 100% stake in GMB and a 68.09% stake in Interfloat.
- Further, the company will open a subsidiary in Liechtenstein, and therein they will hold and control a 31.91% stake in Interfloat.
- Borosil board approved Rs. 275 Cr. to acquire GMB and Interfloat ltd.
- Borosil is going to pay Rs. 204 Cr. for GMB ltd in cash. Whereas for Interfloat ltd. payment of Rs. 225 Cr. is going to be paid in two parts, that is Rs. 41 Cr. will be in cash and Rs. 184 Cr. in a swap of shares. Preference shares will be issued and given to the parent company.
- An additional amount to be determined based on the performance of lnterfloat in calendar years 2024 to 2026, not exceeding 50% of EBIT of lnterfloat.
- The acquisition will take 6-18 weeks to be complete.
- Borosil renewable will hold a 100% stake in both the company.
- Interfloat corporation has a turnover of Rs. 485 Cr. whereas the turnover of GMB is Rs. 380cr.
- While the turnover of Borosil Renewable ltd. is only Rs. 169 Cr. as of 31st December 2021.
- The valuation of price to sales of the GMB and Interfloat corporation is .5 and .46 respectively which is generally considered as good.
- With its acquisition of the Interfloat Group, Borosil Renewable solar glass output will grow to 750 TPD from the current 450 TPD, an increase of 66%.
Benefits of Acquisition:
- Borosil ltd. has already captured the 35% market in India and due to this acquisition, there will be a huge help in getting exposure to the European market. Their export will be boosted by huge numbers.
- But the problem is 46.74% of their turnover is debt that the company hold which is amount to Rs. 79 Cr. as of 31st December 2021 and due to this acquisition company has taken the approval of Rs. 275 Cr. debt from the board so, the debt of the company also going to increase by huge numbers.
What should Investors do?
There will be a huge effect on the finances of the Borosil and the volatility in the price of the share is also seen. Borosil has potential and the government is also supporting the renewable industry a lot which could be beneficial for the company as well.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.