Zuari Industries to Acquire ZACL Shares Worth ₹30 Crore

Zuari Industries Limited (ZIL) has informed the stock exchanges about its decision to purchase equity shares of Zuari Agro Chemicals Limited (ZACL) for a maximum value of ₹30 crore. This acquisition will be executed in one or more tranches and is set to take place from Zuari Management Services Limited (ZMSL), a wholly-owned subsidiary of ZIL.

ZACL, an associate company of Zuari Industries Limited, operates within the fertiliser industry and plays a vital role in the agricultural sector. ZACL was incorporated on September 10, 2009, and has been actively engaged in the manufacturing of fertilisers. Over the years, ZACL has seen varying financial performance, with a standalone turnover of ₹83 crore for the financial year ending March 31, 2024. This marks a decline from the ₹165 crore achieved in FY 2022-23, though it is on par with the ₹83.01 crore reported in FY 2021-22.

The proposed purchase of ZACL shares from ZMSL is structured to occur at an arm’s length basis, ensuring fairness in the transaction. It is important to note that both ZIL and ZMSL are promoters of ZACL, and there is a degree of commonality in the promoter groups of ZIL and ZACL.

The objective of this acquisition is to increase ZIL’s direct holding in ZACL. The overall holding of 32.08% will remain unchanged post-transaction, as ZIL and ZMSL will continue to hold this percentage collectively. The direct holding of ZIL will increase proportionally with the number of shares purchased from ZMSL.

The transaction is anticipated to be completed within the current financial year, FY 2024-25. Upon completion, this acquisition will not alter the overall equity stake held by ZIL and ZMSL in ZACL, ensuring continuity in their collective 32.08% ownership.

In addition to the acquisition news, ZIL also reported its financial performance for the quarter ended June 30, 2024. The company posted a consolidated revenue of ₹242 crore for Q1 FY25, reflecting a decrease of 14.8% compared to Q1 FY24.

On a standalone basis, the company’s revenue from operations stands at ₹214.5 crore, marking a significant increase of 30% compared to Q1 FY24. The standalone operating EBITDA also showed substantial improvement, rising to ₹23.5 crore, up by 159% compared to the same quarter in the previous financial year.

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