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Cement - Products, Small Cap

Hil will hold a meeting of the Board of Directors of the Company on 7 May 2024.

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HIL has completed the acquisition of Crestia Polytech for a cash consideration of Rs 158.44 crore. The company also completed the acquisition of its group entities being Topline Industries, Aditya Polytechnic and Prabhu Sainath Polymers has also been completed. However, the completion of acquisition of Aditya Industries has not been completed since the conversion of said partnership firm into private limited company is under process till the date of this disclosure, and the acquisition will be completed once the conversion is occurred.

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Four wholly owned subsidiaries namely, Topline Industries, Aditya Polytechnic, Aditya Industries and Sainath Polymers.

Crestia is engaged is the business of manufacturing and trading of HDPE and PVC pipes, tanks, containers, fittings, filters, injection and moulding items. Its turnover for financial year 2022-2023 was Rs 169 crore.

Crestia and its subsidiaries, with an estimated turnover of Rs 330 crore in FY 24, are strong players in the pipes, fittings and water tank sector with three flagship brands: Topline, Rockwell, and Soniplast

With the proposed acquisition, the company will have additional capacity of approximately 83,500 million tonnes per annum (MTPA) in East India to cater the eastern states of India and customer access along with government approvals to the company in relevant products and geographic segments.

The said acquisition offers an attractive geographical advantage with growth potential, logistics advantage and upcoming manufacturing hub. This will help the company to enter into new product segments including HDPE pipes and fittings, electro fusion fittings and water tanks.

The company will acquire 100% stake in Crestia for total consideration of up to Rs 160 crore which is subject to net working capital and other adjustments that are mutually agreed between the parties to the transaction.

Out of total consideration, Rs 70 crore will utilized towards primary infusion for subscription to equity shares of Crestia representing such number of equity shares to be issued and allotted by Crestia as per share subscription and purchase agreement. Using a part of the subscription amount infused into Crestia for the purpose of Crestia acquiring the entire shareholding of Topline Industries, Aditya Polytechnic, Sainath Polymers and Aditya Industries for an aggregate consideration of up to Rs 38 crore.

Further, the balance equity shareholding of Crestia will be acquired by the company for an aggregate consideration of up to Rs 90 crore.

Through Crestia, The company will indirectly acquire 100% of the equity share capital of Crestias four wholly owned subsidiaries.

The company said that this acquisition is a significant step towards its commitment to further accelerate its fast-growing Pipes & Fittings business in the estimated Rs 55,000 crore Indian PVC Pipes & Fittings market. With a complementary portfolio of products, technologies and market footprint, it will also help to significantly scale production capacity and nearly double its revenue.

Avanti Birla said, The agreement to acquire Topline perfectly aligns with our ambition, and is part of our growth strategy for the pipes & fittings business at HIL. The combined synergies of the two organisations will broaden the product portfolio, manufacturing capacity and market reach for us. Our ambition is to be five times our current size in this category by 2026.

The acquisition offers immense growth potential. It not only doubles our revenue but also immediately enhances our production capacity three-fold, especially in the strategically important Eastern region. We also gain access to Topline’s significant channel presence across 15 states, with the East being a stronghold. Significant government and private investments expected across infrastructure, construction, real estate and agriculture sectors ensures a place for HIL in a fast paced transformation journey. We are committed to delivering exceptional products and services to our customers.”

Akshat Seth, managing director and CEO of HIL said, “The unique capabilities of Topline perfectly complement HIL’s portfolio and opens new product segments and markets for us. This acquisition will enable our entry into large segments such as high density polyethylene (HDPE), medium density polyethylene (MDPE) and water tanks.

In fact, we will nearly double our SKU offerings. Access to patented technologies in electrofusion fittings and water tanks will position us among the top tier players. This also enhances HIL's presence in significant government projects and secures JJM (jal jeevan mission) approval across 12 states. We will now be able to serve customers in sectors such as agriculture, telecom and natural Gas.”

HIL is a flagship company of the $2.9bn CK Birla Group. The company offers comprehensive home and building material solutions, and has achieved market leadership by developing and marketing the most sustainable and relevant products which are future ready, high quality and have innovation at its core.

The company reported a consolidated net loss of Rs 7.18 crore in Q3 FY24 as compared with a net profit of Rs 12.53 crore in Q3 FY23. While net sales stood at Rs 784.24 crore in Q3 FY24, up 2.2% year on year.

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Hil announced that the Board of Directors of the Company at its meeting held on 2 February 2024, inter alia, have recommended the interim dividend of Rs 15 per equity Share (i.e. 150%) , subject to the approval of the shareholders.

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