May 13: Chemical-based multi-business firm SRF Ltd , which is into manufacture of industrial and specialty intermediates, is to sell its Engineering Plastics Business to DSM, a Life Sciences and Materials Sciences company. The deal would comprise an all-cash transaction, valued at close to Rs 320 crore.
SRFs Engineering Plastics Business division produces multiple grades of engineering plastic compounds, catering to the automotive and electrical industries.
According to a news report, the sale deal could be seen as significant milestone, as the company would be taking a new step towards focusing on its core businesses.
The company’s Engineering Plastics Business has been profitable, and has grown into a niche business for SRF. However, realisation that scaling it into a large business would have taken significant time, and so the new move. The company had been mulling over handing it over to a credible player in this regard.
The transaction is seen as helping achieve three critical goals for itself and also its shareholders. The company believes that the transaction would provide cash and liquidity to further strengthen its balance sheet. Also, it feels tha the transaction would aid it to optimize and focus its efforts and resources on developing more-and-more complex technologies within the chemicals business space.
Moreover, the transaction also recognizes the value of SRF’s engineering plastics business, and places a chunk of its employees into DSM, which is globally renowned name in the engineering plastics space.
SRF has an annual turnover of Rs 5,600 crore, and is present in domains including Technical Textiles, Fluorochemicals, Specialty Chemicals, Packaging Films and Engineering Plastics.