CUMI acquires German firm Rhodius at an enterprise value of Rs 464 crore

Representative image.

Continuing its expansion strategy, Carborundum Universal Limited (CUMI), a Murugappa group company, has penned a pact to acquire Rhodius Abrasives, a German firm.

The acquisition will be done through CUMI Abrasives GmbH, Germany, a step-down wholly owned subsidiary of Carborundum Universal Limited (CUMI).

The step-down subsidiary has entered into a binding share purchase agreement to buy 100 percent stake in Rhodius Abrasives. The deal was signed on February 3.

The acquisition is being done at an indicative enterprise value of 55 million euros (Rs 464 crore).

The transaction is expected to be completed by the end of March.

Rhodius Abrasives, a part of Rhodius Group, has been manufacturing high-performance tools for the machining of metal and stone, which are used in over 100 countries worldwide. Its manufacturing facility is in the Eifel region of Germany.

Rhodius has over seven decades of experience in manufacturing high-performance grinding and cutting consumables for machining metal and stones. Rhodius brings in a vast and innovative product lineup with various patented benefits that create unique selling opportunities.

“Rhodius is a strong proprietary brand with a great reputation and has long-standing dealer relationships across EMEA and the USA. More than 70 percent of its revenue is generated through exports to over 100 countries. We believe that the expertise and portfolio of CUMI and Rhodius complement each other and the acquisition will significantly aid CUMI in global market expansion,” said N Ananthaseshan, Managing Director of CUMI.

Along with the just-concluded AWUKO Abrasives asset purchase, the acquisition of Rhodius aligns with CUMI’s strategic expansion plans, according to Sridharan Rangarajan, Director Finance and Strategy of CUMI.

Rhodius ended 2021 with sales of 62.5 million euros along with a healthy return profile. Rhodius is a producer of the world’s thinnest cutting wheel with extensive innovative capabilities, including more cuts per battery charge.

The Indian market for thin wheels is expected to grow fast with the Gati Sakthi programme of the Government of India. “We expect growth in the US market with the US government committed to spend on infrastructure. Similar trends are visible in other geographies. A CUMI-Rhodius alliance will be timely to capture these opportunities. We see synergies in assured grain supply, market access in India and Russia, and making CUMI’s products available through Rhodius’s distribution network,” Rangarajan added.

Bernd Lichter, Managing Partner at Rhodius, said in a statement that "CUMI offers Rhodius Abrasives a unique platform with important strategic advantages, especially in the areas of depth of product range, raw materials and global distribution. This will elevate Rhodius’s growth strategy to the next level."

Investec was the exclusive financial advisor to CUMI and CapitalMind represented Rhodius on the transaction.

The consolidated revenue of Carborundum stood at Rs 2,631 crore and the PAT (profit after tax) at Rs 284 crore for the financial year 2021.

CUMI is a mines-to-market company whose integrated operations include mining, power generation, fusion, manufacturing, marketing and distribution. CUMI has over 5,000 employees worldwide.