Calcutta, Sept. 23: ICI India Ltd has decided to sell its Synetix division to Johnson Matthey Plc of the UK. The move follows that of its principal, Imperial Chemical Industries’ decision to divest the catalyst business globally to the same company for £ 260 million.
ICI India informed the stock exchanges today that it will gain Rs 140 crore in cash from the deal. The transaction will be completed in this fiscal.
Synetix focuses on sales of catalysts and service technologies in key segments of edible oils, polymerisation, methanol, ammonia, oil and gas, chemicals, fine chemicals and oleochemicals.
In the year ended December 31, 2001, Synetix earned £ 146 million in revenues world-wide (Rs 43 crore in India in the year ended March 31 2002), and posted a trading profit of £ 24 million.
Imperial Chemical Industries said it would use the proceeds of the sale to reduce indebtedness, whereas its debt-free Indian subsidiary said it would use the cash to strengthen its core businesses—decorative paints and industrial specialities.
M. R. Rajaram, chief financial officer and whole-time director of ICI India, said: “We intend to invest the cash for the growth of our core businesses. Alternatively, we might consider paying a special dividend or buy back shares of the company to disburse the cash, but our priority is to use it to strengthen our core operations.”
ICI India acquired the nickel catalyst business of Hindustan Lever Ltd (HLL) in December last year for around Rs 20 crore in a deal aimed at strengthening Synetix. But in January this year, its UK parent took a strategic decision to exit the catalyst business.
The global deal will entail sale of ICI India’s two plants—one at Taloja and the other at Panki, which was acquired from HLL. The assets of the catalyst business in India are roughly valued at Rs 40 crore. Rajaram said Synetix was expected to earn Rs 60-65 crore in revenues in India this year.
ICI India has been restructuring its business portfolio for the last one year. It has so far sold its pharmaceuticals, polyurethane and industrial paints divisions. The company wants to exit the industrial chemicals segment completely, which comprises nitro-cellulose and rubber chemicals, besides catalysts.
ICI India also has a 51 per cent stake in Indian Explosives Ltd—a joint venture with Orica of Australia. ICI has already declared its intention to offload its stake in Indian Explosives as well.