Mysore Petro Chemicals, which trades in petrochemicals, is set to acquire a UK recycling company for more than 56 times the target company's annual revenue. The acquisition of QC Polymer will be covered entirely by cash, according to a stock exchange filing dated January 8.
Mysore Petro Chemicals said it will acquire the barely three-year-old private company for GBP 2.9 million (Rs 30.72 crore).
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A large part of the acquisition cost was to infuse debt "to meet the operational requirements of the target company," Mysore Petro Chemicals said. The cost includes debt infusion of GBP 2 million (Rs 21.19 crore) and 3,200 shares of face value of GBP 1 each at a premium of GBP 200 each purchased for GBP 900,000 (Rs 9.53 crore).
QC Polymer started doing business on April 29, 2021. According to the filing, its turnover was nil in FY22 and GBP 51,274 (Rs 54.32 lakh) in FY23. Mysore Petro Chemicals' revenue was Rs 31.07 crore for FY23, or a little more than the acquisition cost.
Moneycontrol has written to Mysore Petro Chemicals for comment on the acquisition and is awaiting its response.
Target company
QC Polymer makes recycled PET flakes from PET waste bottles which are used in food packaging, textiles polyester and straps.
Mysore Petro Chemicals said the acquisition will enable it to explore new business opportunities. This will help QC Polymer to stimulate its existing business operations and generate additional revenue.
Buyer company
Mysore Petro Chemicals was incorporated in 1969 and started manufacturing phthalic anhydride – widely used for the production of certain dyes – at its Raichur plant in Karnataka in 1976.
In 2013, the Raichur plant was shut down because it became unviable, according to the company's annual report. The plant incurred huge losses for the previous three years, according to a company stock exchange filing at the time.
In 2017, the company sold its maleic anhydride business to IG Petrochemicals through a slump sale. Maleic anhydride is used in coatings and polymers applications.
"Presently, the company is engaged in the trading of Orthoxylene, Phthalic Anhydride, Maleic Anhydride, Benzoic Acid and other petrochemical products,” Mysore Petro Chemicals said in its FY23 annual report. “Along with the existing business of trading, the company is in the process of setting up a grain-based distillery of ethanol for ethanol blending programme."
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