Carborundum Universal share price rises 6% on multiple acquisitions

The uptick in share price came after Carborundum Universal revealed that it has entered into a share purchase agreement to acquire a 100 per cent stake in Silicon Carbide Products, USA.

Carborundum Universal shares in focus: Shares of Carborundum Universal rallied as much as 5.89 per cent to hit an intraday high of Rs 1,558.20 per share on Tuesday, September 17, 2024.

The uptick in share price came after Carborundum Universal revealed that it has entered into a share purchase agreement to acquire a 100 per cent stake in Silicon Carbide Products (SCP), Inc., USA. The total consideration for this acquisition is Rs 56 crore. 

In an exchange filing, the company said, “We wish to inform you that the company has today entered into a Purchase Agreement with Silicon Carbide Products Inc. (‘SCP Inc’), Joshua J. Dahlman and Rick L Cleveland (the existing ‘Equity holders’ of SCP Inc) for acquiring 100 per cent membership interest in SCP Inc through a Type-F reorganisation as provided under the US Internal Revenue Code (IRC) section 368(a)(1)(F). For the purposes of this acquisition, the Company would be incorporating a wholly owned subsidiary in the USA which will be the SPV for the acquisition.”

 

Silicon Carbide Products (SCP) specialises in producing high-quality Nitride Bonded Silicon Carbide (NBSiC) products, which are known for their superior wear and thermal shock resistance. With over 30 years of experience, SCP provides customised solutions to a range of industries, including power generation, mining, material handling, non-ferrous molten metal transfer, and petrochemical refineries.

In a separate development, Carborundum Universal has also entered into a Share Subscription and Shareholders’ Agreement with Amplus Energy Solutions PTE Limited, Singapore, and Grian Energy Private Limited (GEPL). 

The company will invest Rs 8 crore in GEPL, acquiring a 4.19 per cent stake in its equity capital, it said. 

This investment will allow Carborundum Universal to access a contracted capacity of approximately 10 MW from GEPL's Captive Power Plant. Additionally, Carborundum Universal has signed a power purchase agreement with GEPL to buy electricity generated by the plant for its own consumption.

Carborundum Universal Ltd, part of the Chennai-based Murugappa Group, is a prominent player in the manufacturing of abrasives, ceramics, refractories, and electro-minerals. The company operates across several business segments, each catering to diverse industrial needs.

In the abrasives segment, Carborundum Universal Ltd produces a wide range of rigid and flexible abrasives. Key products include Bonded Abrasives, Coated Abrasives, Metal Working Fluids, and Super Abrasives. With a commanding market share of over 30% in bonded abrasives, the company is a leading force in the Indian abrasives industry.

The Industrial Ceramics division offers advanced ceramic materials such as Alumina, Zirconia, Zirconia Toughened Alumina, and Silicon Carbide. These products serve various industries including Power Generation and Distribution, Mining and Ore Processing, Cement, Ferrous Metals, Automotive, Battery Manufacturing, Glass, Paper, Food Grain Handling, Petrochemicals, and Ceramic Tiles.

The company’s production network spans ten manufacturing plants across India, Russia, and Thailand. 

Recently, Carborundum Universal Ltd has expanded its product offerings with innovations in Abrasives (such as Cylindrical Wheels, Resin Bond for Face Grinding, and Film Backed Discs), Composites (including CFRP Drone Tubes and Copper Shaft f/c Lining), and Ceramics (with products like CUMITHERM-Z, Tape Cast Alumina Ceramics, and Sputtered Products). 

These new products cater to industries including Automotive, Auto Components, Engineering, Basic Metals, Infrastructure, Energy, Power, and Housing.

With a robust global presence, the company operates marketing entities in North America, the Middle East, and China, and has distributors in over 55 markets worldwide. 

At 11:20 AM, shares of the company were trading 3.84 per cent higher at Rs 1,527.90 per share. In comparison, BSE Sensex was trading marginally higher at 83,021.77 levels.