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Saint-Gobain Glass India is all set to buy Sezal Glass' float glass business for Rs 686 crore.
Industry experts see this as the first sign of consolidation in the domestic float glass business.
Sezal Glass Ltd (formerly Sejal Architecture Glass Ltd) today informed the stock exchanges that it executed a binding business transfer agreement with Saint-Gobain Glass India Ltd to sell its float glass business as a going concern on a slump sale basis.
Sezal's float glass unit in Jhagadia, Bharuch district, Gujarat, has a capacity of 550 tonnes a day.
The plant was set up with an investment of Rs 600 crore. The company also signed an agreement with the Gujarat Government to invest another Rs 750 crore on another float glass line.
Sezal profile
Sezal Glass' business is divided into three undertakings consisting of architectural glass processing, float glass manufacturing and retail showrooms in Mumbai specialising in home and office interiors and decorative products.
Sezal Glass had earlier sought and obtained its shareholders' approval to sell its architectural glass process business undertaking and/or the float glass manufacturing business.
The company had explained that it was undertaking this restructuring to reduce the debt.
Sezal's Re 1 shares closed nearly 6 per cent up on the NSE at Rs 4.45.
The company reported a loss of Rs 64 crore on sales of Rs 280 crore in 2010-11 against a profit of Rs 2 crore on sales of Rs 45 crore in the previous year.
The float glass division reported revenues of Rs 243 crore and a loss of Rs 25 crore.
Sezal's interest and finance costs during 2010-11 increased to Rs 66.73 crore from Rs 3.19 crore the previous year.
Saint-Gobain Glass India has a 1,500 tonnes a day float glass plant near Chennai and is investing Rs 1,000 crore in a plant with an annual capacity of three lakh tonnes in Rajasthan.
This acquisition of Sezal Glass' unit, with access to raw materials in the vicinity, is expected to give the Indian subsidiary of the French multinational greater access to the western region, the second largest market in the country.
Work on Saint-Gobain Glass India's Rajasthan plant is going ahead and the unit is expected to begin production in early 2012.
The company signed an agreement with the Rajasthan Government for the plant in August 2008 and had originally planned to commission the unit in the first quarter of 2010.
However, this was put off due to the economic slowdown.
The Rajasthan plant will help Saint-Gobain access the northern markets, the largest in the country.
Glass industry experts have been talking of a consolidation in the float glass business, given the high capital costs of putting up a float glass line and the cyclical nature of the business.
A bulk of the glass is used in the construction industry and the automobile industry.
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