PCBL to acquire specialty chemicals company Aquapharm Chemicals for ₹3,800 crore

PCBL, part of the RP-Sanjiv Goenka Group, on Tuesday said its board of directors has approved the acquisition of Pune-based specialty chemicals company Aquapharm Chemicals for ₹3,800 crore, in a bid to foray into global specialty segments of water treatment chemicals and oil and gas chemicals.

In a stock exchange filing, PCBL said its board of directors gave in-principle approval to the acquisition, directly or through one of its affiliates, of 2.12 lakh shares of Aquapharm Chemicals (ACPL), representing 100 per cent of the issued and paid-up share capital of the firm, promoted by the Mangwani and Desai families.

PCBL, the largest carbon black manufacturer in India, executed a share purchase agreement (SPA) with ACPL, Vimal V. Mangwani, Dharmesh Mangwani, Nitin Raojibhai Desai and other shareholders of the firm for undertaking the proposed acquisition, subject to obtaining all necessary approvals and fulfillment of other customary conditions, as per the terms and conditions specified in the SPA.

The acquisition is expected to be completed within two-three months from the date of SPA execution.

Amid competition

Earlier, reports claimed that Dorf-Ketal Chemicals and Tata Chemicals were also in the fray to acquire Aquapharm Chemicals, which was looking to raise money through a stake sale.

The RP-Sanjiv Goenka Group company said the proposed transaction for the acquisition of ACPL will be financed through a mix of internal accruals and external fund raise by the company and/or its affiliates/associates. “This acquisition of ACPL marks the company’s foray into global specialty segments of water treatment chemicals and oil and gas chemicals and it is the first milestone in achieving the vision of creating a multi-platform global specialty chemical business portfolio,” the company pointed out.

Sanjiv Goenka, Chairman, PCBL, said, “Aquapharm is a leading specialty chemicals company and is India’s largest phosphonate producer. The acquisition is value-accretive and margin-accretive, and is in the space of fast-growing high-margin chemicals . It’s a platform which offers a lot of growth and high margins. It’s a unique opportunity and we are delighted to take this opportunity.”

ACPL, which produces a wide range of phosphonate products under the trade name “Aquacid”, reported a consolidated turnover of ₹2,008.8 crore for the last financial year. The firm is a private company engaged in the business of offering water treatment solutions to marquee global customers across diverse end-markets.

Aquapharm Chemicals has manufacturing facilities in India, the US, and Saudi Arabia. Overseas plants are being operated through subsidiaries.

FY23 performance

PCBL, formerly known as Phillips Carbon Black Ltd, has a customer base in over 50 countries with a product portfolio to meet requirements across industries such as tyres, rubber, plastics, inks, coatings, engineering plastics, batteries, and conductives, among others. The company’s carbon black production during FY23 was 4,47,003 million tonnes (mt) compared with 4,56,484 mt in FY22. The company has been focusing on the production of value-added products in the performance and specialty chemical segment, which is having higher contribution margin.

PCBL’s consolidated revenue from operations stood at ₹5,774.06 crore in FY23, while net profit stood at ₹4,42.19 crore.

Globally, the speciality chemical industry currently stands at around $700 billion, while in India the size of industry is around $30-35 billion.

On Tuesday, PCBL scrip ended the day at ₹254.30 apiece, down 2.90 per cent from the previous close.

Interestingly, different RP-Sanjiv Goenka Group companies have been looking to go for inorganic routes to grow their businesses. Saregama, which owns the largest music archives in India, in September this year acquired a majority stake in the country’s leading digital entertainment company Pocket Aces.

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