Calcutta, Sept. 3: ECE Industries, a B. K. Birla group company, is seeking shareholders’ consent to sell its elevator maintenance business to ThyssenKrupp of Germany for Rs 23 crore.
ECE will transfer 600 field employees and assets valued at Rs 5.5 crore. The elevator business of ECE which includes a production facility, earned around Rs 50 crore in revenues every year.
Besides the Rs 23-crore compensation, ECE will also receive a 9 per cent stake in the ThyssenKrupp-promoted firm that will acquire the business. ECE will, however, offload that stake to the promoters of the company for Rs 5 crore three years later.
ThyssenKrupp will not acquire ECE’s manufacturing facility in Ghaziabad or any of the elevator division’s liabilities. The unit in Ghaziabad will continue to manufacture elevator equipment and supply them to the German firm.
For the next five years, there will be a ‘non-compete’ agreement between the two companies. In return, ThyssenKrupp will keep ECE’s production facility “booked at its normal capacity”.
In addition to the consideration paid up front and the stake in the acquiring company, ECE will receive a 6 per cent royalty on the revenue earned by ThyssenKrupp from the maintenance contracts that are being transferred to it as part of the sale.
Approval will be obtained for the sale of the production unit as well, though ECE has not clearly stated in the notice to its shareholders whether it intends to sell it in future.
The B. K. Birla group has been trying to restructure, but this is the first deal to materialise in the last five years. The last business to be sold by the group was ECE’s lighting division. The group has been trying to offload some of its cement plants and turn its tyre business into a joint venture. However, it did not have much luck with both.