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Mr Anil Ambani-led Reliance ADAG is investing Rs 100-crore in Butterfly Gandhimathi Appliances Ltd, according to sources in private equity circles.
Although neither company was available for comment on the development, the source revealed that Reliance Equity Advisors, the PE arm of Reliance Capital, will be acquiring a 10-12 per cent stake in the kitchen appliances company. “The deal will be done before the end of this month,” he said.
Butterfly Gandhimathi manufactures and markets a range of appliances, from pressure cookers to mixer grinders, under the brand name ‘Butterfly'. Business Line had earlier reported that the Chennai-based kitchen appliances major was planning to tap PE funding for capacity expansion and some upstream projects. The mandate was given to Motilal Oswal Financial Services.
Scouting for opportunities
Besides Reliance Equity, a couple of other PE players, including an overseas venture capital fund, were also in the fray for a stake in Butterfly, sources said. For its part, Reliance Equity has been scouting for opportunities in the infrastructure, consumer space and media and entertainment sectors.
Following a BIFR approval in August 2011, Butterfly had merged another group company, Gangadharam Appliances, with itself. As a result, the promoters' stake in the company went up to 78 per cent from 65 per cent earlier.
It is not clear whether the promoters will also bring in fresh equity to prevent stake dilution post-PE infusion.
Profit jumps
For the quarter ended December 2011, Butterfly Gandhimathi Appliances posted a little over 90 per cent growth in net profit at Rs 11.53 crore, against Rs 6.03 crore in the comparable previous year quarter. Sales more than doubled to Rs 226.48 crore for the quarter from Rs 86.57 crore in the previous year. Earnings per share stood at Rs 7.47 as against Rs 3.91.
For the nine-month period ended December 31, the net profit stood at Rs 25.14 crore (Rs 11.38 crore) and turnover went up to Rs 406 crore from Rs 200.37 crore in the year-ago period.
The growth in turnover and net profits can primarily be attributed to the Tamil Nadu Government order to manufacture and supply wet grinders and mixer grinders (worth Rs 135 crore) during the period.
The shares of Gandhimathi closed last week at Rs 356.05 on the BSE.
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