In an interview with CNBC-TV18, Ganpatraj Chowdhary, Managing Director
of Riddhi Siddhi Gluco Biols talks about the investment made by
Roquette Freres and its expected valuations. Roquette has a majority
stake in the Riddhi Siddhi subsidiary. "Among all the manufacturing
units of Riddhi Siddhi, three of them will be tasked to the subsidiary
company. Roquette will take a majority stake in this subsidiary
company. The enterprise value is estimated approximately at Rs 1,250
crore," says Chowdhary.
He also sees FY11 profit at Rs 1,000 crore with an EBITDA margin of
20%. "We are expecting EBITDA for the current year to be around Rs 200
crore plus," he adds.
Below is a verbatim transcript of Ganpatraj Chowdhary's interview with
CNBC-TV18's Reema Tendulkar and Soniya Shenoy. Also watch the
accompanying video.
Q: Could you tell us the investment Roquette Freres is looking to make
in your corn subsidiary? How much stake are they acquiring and at what
valuation?
A: Among all the manufacturing units of Riddhi Siddhi, three of them
will be tasked to the subsidiary company. Roquette will take a
majority stake in this subsidiary company. They have option to acquire
the entire stake of Riddhi Siddhi. After this, the subsidiary will
become a joint venture between Riddhi Siddhi and Roquette Freres and
Riddhi Siddhi will have a minority stake.
Q: What valuation is Roquette Freres giving to your corn subsidiary?
A: The enterprise value is estimated approximately at Rs 1,250 crore,
which will be released after the due diligence of the closure of the
current financial year. Accordingly, the benefit of till closure date
will also be available to the pertained stakeholders.
Q: What kind of acquisition is this? Will it take place in tranches?
How much will be acquired first tranche if you could tell us and what
is the eventual game plan?
A: Initially, Roquette will take a majority stake and can move up to
75% stake. They have a right to take the balance stake of Riddhi
Siddhi. As a part of restructuring share holding, in this deal, the
Roquette Freres already hold the stake in our company 14.95% in RSGPL.
That equity will be cancelled as a part of restructuring of this
exercise. Accordingly, the benefit of this enterprise value of Rs
1,250 crore would be available to the balanced portion of 85% equity
stake holder.
Q: By when do you expect this to be done?
A: We are estimating the time frame for completing the entire
transaction between six to nine months.
Q: There are some really aggressive estimates that analysts have come
out with for your company. It is expected that with your power
business coming on board, the restructuring that you have announced
and the money that may come in, your sales will grow by almost about
35% from FY11 to FY12. Your net profits too may grow from about Rs 100
crore in FY11, estimated to about Rs 130 crore in FY12. Is that a fair
estimate or is that being somewhere ballpark?
A: We are confident of receiving Rs 1,000 crore turnover for the
current year, with the EBITDA margin of 20%. We are expecting EBITDA
for the current year to be around Rs 200 crore plus.
Q: And in FY12 thereafter?
A: We have been growing only 25% per annum and we are confident of
doing the same 25% in FY12.
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