Plan to monetise assets to reduce overall debt: Avantha

A: You have to take it purely from the Avantha Group point of view because the de-merger is going to be beneficial to the all the shareholders of Crompton Greaves. Because it is a vertical de-merger so all the shareholders of Crompton Greaves augur to get the benefit of de-merger. However, what we have done from the Avantha Group is that we are in the process of monetising some of the assets to reduce the overall debt.

In that process we have taken a call to exit this business and we feel that after the long round of discussions with various PE investors we found that this value was quite reasonable. Given the fact that de-merger is still sometime away and the effective date of de-merger is October 1, 2015, which means that the residual shareholders will have another 6 months of the Crompton Greaves profitability and cash flows to be accessed. The fact that we are exiting the deal in full we thought that the valuation was quite reasonable.

Ekta: Given that this is the business which has been on a stronger financial footing over the last few years and given that the Crompton brand enjoys a very high market share is it fair to say that the final price of the deal is lower than the valuations enjoyed by yours peers also? 

A: The point is that it is Avantha Group call. We are looking at various monetising options so this was one of the better options for us from the both the timing point of view and also from the value point of view. Though we are exiting the consumer business in full but when you have a monetisation option to go through these are some of the things which we need to keep in mind that timing and valuation are very critical when you want to exit a business without going into what are the strategic benefits and de-merits of that business.Anuj: Recently the Avantha Group also sold one of its power plants to Adani Power and there are talks that Tata Power could be in the fray for the second power unit. Could you confirm or deny this? A: Discussions are going on but we are still in the discussions stage we have not reached any settlement or agreement on the monetisation.