Nirma looks to raise up to Rs 7,000 crore to fund buys and expansion

Detergent chemical major, Nirma Group, is looking to raise up to Rs 7,000 crore for acquisition and expansion of its existing facilities, investment banking sources said.

The unlisted company posted revenues to the tune of Rs 11,403 crore in fiscal 2023.

It is on the shortlist to make a financial bid for Glenmark Life Sciences, which was put on the block by its promoter.

Investment banking sources said Nirma has indicated that its diversification plans will be undertaken for acquisitions ranging from Rs 5,000 crore and Rs 7,000 crore in either domestic or overseas markets.

If the acquisitions don’t materialise, the company may look to boost its existing businesses aggressively and plan capital expenditure of a similar size, the source said.

 

The company has not specified its acquisition target while initiating talks for a fund-raising exercise.

As Indian banks are not allowed to fund acquisitions, the company may tap the private credit market currently dominated by global private equity players.

Apart from Nirma, Sekhmet Pharmaventures is also in the race to acquire Glenmark Life Sciences, which may cost the winner up to Rs 6,000 crore, say bankers.

Mumbai-based Glenmark Pharmaceuticals owns 83 per cent stake in Glenmark Life Sciences and is selling the stake to reduce its net debt of Rs 2,904 crore as of March this year.

On Thursday, Glenmark Life Sciences closed one per cent down at Rs 652 a share with a total market valuation of Rs 7,992 crore.

An email sent to Nirma did not elicit any response.

A source said Nirma, which posted a profit of Rs 909 crore in fiscal 2023, is expected to generate annual cash accruals of more than Rs 1,700 crore as against debt repayment of Rs 650-750 crore in fiscal 2024.

"They want to make an aggressive bid for Glenmark Life Sciences as they are targeting healthcare as the next big focus area," a banker said.

In April this year, the Nirma group acquired Stericon Pharma, an eye drops and contact lens maker, for around Rs 350 crore.

Set up by Karsanbhai Patel in 1969 as a detergent and soap company, the Nirma group is a leading chemical, cement and detergent manufacturer.

The acquisition of Glenmark Life Sciences will give a fillip to the group's ambitions in the health-care segment. The group already sells medical devices under Nirlife Healthcare.

In July 2016, Nirma had acquired Lafarge India cement assets with 11 million tonnes capacity for Rs 9,400 crore thus making its first major acquisition.

Nirma funded Lafarge's acquisition, with a mix of debt from foreign banks and equity.

Nirma's acquisitions: 

 July 2016:  Buys Lafarge India cement assets for Rs 9,400 crore

April 2016: Nirma buys California-based natural soda ash producer, Searles Valley Minerals Inc for $200 million

April 2023: Buys eye drops and contact lens maker Stericon Pharma for around Rs 350 crore