HIL To Acquire Crestia Polytech At Enterprise Value Of Rs 265 Crore
The acquisition will accelerate HIL's presence in the fast-growing pipes and fittings segment, which the company is a new entrant, the company said.
CK Birla Group firm HIL Ltd on Monday announced the acquisition of Patna-based Crestia Polytech, maker of the Topline brand of pipes and fittings, along with its four other subsidiaries at an enterprise value of Rs 265 crore.
The acquisition will accelerate HIL's presence in the fast-growing pipes and fittings segment, which the company is a new entrant, the company said.
Crestia Polytech and its wholly-owned arms Topline Industries, Aditya Polytechnic, Aditya Industries and Sainath Polymers are strong players in Eastern India in pipes, fittings and water tank segments with brands Topline, Rockwell and Soniplast, HIL said.
"The enterprise value of what we are buying is about Rs 265 crore and we are taking over 100 per cent ownership of this company. The equity on the books is about Rs 125 crore and Rs 140 crore is debt," HIL Ltd Managing Director and CEO Akshat Seth told PTI.
He further said, 'We are taking over the debt on the books and equity is being financed partly through internal accruals and partly through bank borrowings from HIL side.
On the significance of the acquisition, Seth said pipes and fittings are one of the youngest part of HIL's portfolio but it's an important part which will drive the future growth of the company in a big way.
"What it does for us strategically is an important one and that's why there is a sense of excitement about that...Our overall HIL ambition is to have USD 1 billion in revenue in the next three years. In that journey, we believe the pipes and fitting segments have to grow at least five times from what we currently are in this three year period," Seth said.
Further, he said, "That is why this acquisition becomes significant because it helps not only that it immediately doubles our revenue and inch closer to the Rs 1,000 crore mark as far as our polymer business is concerned, it also makes our production capacity three times than what it currently is."
Currently, HIL's revenue from pipes and fittings is around Rs 400 crore, he said, adding, "We expect it to be in the zone of Rs 2,000 to 2,500 crore within the next three years."
On the capacity side, he said, "We are at about 35,000 metric tons per annum (MTPA) and this acquisition adds another 83,000 MTPA. So, all in all, we will be in zone 1,15,000 MTPA at the end of this acquisition."
HIL already has plants in North, West and South India, Seth said, adding, "East was a missing element and with this we now have a manufacturing footprint also in East."
HIL President Strategy, Avanti Birla said, "The agreement to acquire Topline perfectly aligns with our ambition, and is part of our growth strategy for the pipes and fittings business at HIL. The combined synergies of the two organisations will broaden the product portfolio, manufacturing capacity and market reach for us."
Besides, Seth said the acquisition of Crestia Polytech gives HIL access to large segments like HPPE (high-performance polypropylene pipes), MDPE (Medium Density Polyethylene pipe), electrofusion and water tanks which the company was not present before.
"There are specific patented technologies which are quite innovative in their segments. In water tanks for instance, they have insulation-based technology which is unique in the market. Similarly, electrofusion is a capability that only a handful of players in the country have and we gain access to that," Seth said.
Moreover, the takeover allows HIL to get into new customer segments such as business to government (B2G) segment where it has not previously been present.
"This company (Crestia) is specified and approved in 12 states across the country and works extensively with government departments (in programmes) like Jal Jeevan Mission, natural gas grid, PM Ujjwala (scheme). So it gets us access to that...These are new markets for us," he added.
He further said Crestia has a strong channel presence selling products in 15 states.
"So that dealer network also comes to us. All of it will be complementary to our portfolio, and we believe can significantly add momentum to our growth story in the pipes and fittings segment," Seth said, adding, "Our plan is that in the next two to three years, Topline will become a brand within the HIL umbrella. It will have its independent existence".