Japan’s appetite for acquisitions in India continues to grow, with Kaneka Corporation, a $4-billion Japanese corporate group, eyeing a minority stake in Supreme Industries, a manufacturer of plastic goods. This will be the second such acquisition this year after Japan’s Kokuyo acquired Camlin India.
According to sources, the talks were in the initial stages but present market conditions may act as a damper. “The talks have been stalled for the time being due to the recent dip in Indian bourses,” said a source close to the development. Details of the proposed deal, including the percentage of stake Kaneka is looking at to acquire, is not known yet.
Kaneka was in talks with private equity investor-Nalanda Capital and the promoters of Supreme simultaneously. Nalanda Capital, headed by former Warburg Pincus India MD Pulak Prasad, holds about 6.44 per cent in Supreme through its India fund —Nalanda India Fund Ltd.
However, Supreme’s promoters denied any plans to dilute stake. A company spokesperson said: “We have to categorically state that there is no question of sale of any stake whatsoever by the promoters of the company to Kaneka Corporation or to any one else.” The promoters holds 49.62 per cent stake in SIL. Mails to Kaneka and Nalanda did not elicit any response.
Kaneka Corporation has diversified into manufacturing resins, synthetic fibre, food items, pharmaceuticals, fine chemicals, medical devices and electrical raw material.
Bombay Stock Exchange data shows that Supreme Industries has a market capital of Rs 2,717 crore. In August, Supreme’s shares moved between a monthly low of Rs 192 and a 52-week high of Rs 229 on the BSE.
The promoter group, including the Taparia family, Venktesh Investment (15.5 per cent), Jovial Investment (15.6) and Boon Investment (15.6) hold 49.62 per cent in Supreme.
Brijesh Koshal, managing director, investment banking, Daiwa Capital Markets India Pvt. Ltd., a wholly-owned arm of leading Japanese banking group, said: “Japanese companies have started looking at India the way they would look at China some years back. With India becoming relatively more attractive, Japanese companies might be sensing a good opportunity to diversify, adding India rather than focusing on China alone."
In May, Japan’s Kokuyo entered an agreement to pick up controlling stake in India's leading stationery manufacturer, Camlin, for Rs 366 crore.
“Our sense is that across various sectors, a lot of Japanese interest is going to be there. Many M&A deals are bound to happen. Though the Japanese companies are pretty careful, these will be long-term investors,” Koshal said.
The Rs 2,300-crore Supreme Industries Ltd has a well-diversified product portfolio comprising pipes and fittings, consumer products, packaging products and industrial products.
