Dhir India Investments plc
05 November 2007
5 November 2007
Dhir India Investments plc
('Dhir India' or the 'Company')
Acquisition of debt of edible oil refining unit in Gujarat
Dhir India (AIM: DHIR), the first UK quoted company established to invest in the
circa $50 billion* Indian non performing assets sector, announces that it has
acquired around 95% of the debt of an edible oil refining unit in Gujarat for a
consideration of approximately £0.80 million.
The company, which is located in Gujarat, refines and sells edible oils. Its
factory, which has a daily capacity of 250 MT per day, is built on a 21,524 sq m
site. Under the terms of the agreements, Dhir India's investment will be secured
against the value of factory, land and building.
Dhir India may operate the company and introduce fresh management and incentives
in order to achieve strong returns and turnaround the financial performance of
the business. In this case, Dhir India would also provide working capital and
activate a third line of production, enhancing the capacity to 350 MT per day at
a cost of £1.15 million. Alternatively, value may be achieved through the sale
of the asset, if appropriate value and returns can be realized through this
route. It is anticipated that the project will take up to three years from
investment to exit.
Commenting on the investment, Alok Dhir of Dhir India commented:
'The demand, in the region, for edible oils is already substantial and is
expected to grow significantly over the coming years.
'The unit is a well established player in Gujarat and its infrastructure is
sound, providing a strong platform for growth. By injecting the necessary
financial resources and introducing and incentivising a fresh, experienced
management team, prospects for building up value are very favourable and we
expect to derive attractive returns from this project over the coming years.'
(*Source: The Wharton School, February 2007)
For further information, please contact
Shiva Consultants Evolution Securities Tavistock
Communications
Alok Dhir Tom Price Simon Hudson
Shivi Agarwal Jeremy Ellis Rachel Drysdale
Chris Clarke
Tel:+91 11 424 10000 Tel: + 44 (0) 20 7071 4300 Tel: + 44(0) 207 920 3150/
+44(0)7979 497 324
About Dhir India Investments
Dhir India provides shareholders with both income and capital growth and was the
first UK quoted vehicle to provide western fund managers with the opportunity to
invest in the Indian non performing assets market. In July 2007 it raised £25
million and commenced trading on AIM.
The Company primarily considers four types of investment opportunity:
- Turnaround of companies
- Re-sale of assets or companies
- Break-up and sale of assets
- Bridge financing
The current stock of non performing assets (NPAs) in India was built up
primarily as result of the transformation of the Indian economy in the 1990s
from a centrally regulated to a more free market economy. During this time,
commercial lending rates were as high as 18-20 percent per annum, whilst the
industrial growth rate remained sluggish at 2-3 per cent. per annum and Indian
industries could not cope with the competition from international companies,
which did not have such a high cost of capital.
This has created an opportunity to invest in NPAs, which are typically
over-leveraged capital structures with insufficient liquidity and in default of
their obligations to creditors. Often these companies have significant assets
and/or solid underlying business fundamentals, which are not being fully
utilised in spite of the fact that the rate of growth in the industrial sector
has caught up with that of the rest of the economy, being an estimated 9-10 per
cent. per annum since 2004-2005.
In such circumstances, Dhir India believes that the resolution of the existing
debts, and in some cases a turnaround of the underlying business, can lead to
substantial profits on exit from the investments being generated in the short
and medium term.
This information is provided by RNS
The company news service from the London Stock Exchange