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Electrical goods manufacturer V-Guard Industries on December 9 said it has entered into an agreement to acquire a 100 percent stake in kitchen appliances company Sunflame Enterprises for Rs 660 crore, on a cash-free, debt-free basis, subject to closing adjustments.
The transaction is expected to close by mid of January 2023 and it would be funded through a mix of internal accruals and debt, the company said in a regulatory filing.
“The acquisition is in line with V-Guard’s strategy to become a significant player in the domestic kitchen appliances segment,” the company further stated.
Meanwhile, shares of V-Guard jumped 4.19 percent to close at Rs 259.80 apiece on BSE after the acquisition announcement.
Speaking on the occasion, Mithun Chittilappilly, Managing Director, V-Guard, said, “Sunflame is an iconic brand etched in the memories of Indian households and is expected to provide significant thrust to V-Guard’s plans to become a leading Indian Kitchen Appliances player. We appreciate the trust reposed by SEPL’s Promoter family in us to take the Sunflame brand to greater heights.”
Moreover, K L Verma, Managing Director, SEPL said, “Having started this journey in 1984, we have come a long way since then. We are confident that the Sunflame brand would scale even greater heights with V-Guard.”
V-Gaurd had recently been identified by Moneycontrol as a potential candidate for the long-term portfolio. As per our market watchers, the consumer durables manufacturer’s growth has been supported by the upgradation of its product portfolio and newer market coverage.
The company started its journey in 1977 with a flagship product – voltage stabilisers. Since then, it has diversified its product portfolio and established itself as a pan-India fast-moving electric goods (FMEG) player, with 14 percent sales growth over the last decade.
The company has been able to maintain EBITDA margins in the 9-11 percent range on account of various cost-optimisation measures and operational efficiencies. “Going forward, the management expects the operating margins to be around 10-11 percent for the next few years,” according to the Moneycontrol report.
Meanwhile, V-Guard had reported a 26.5 percent decline in its consolidated net profit at Rs 43.66 crore for the second quarter ended September 30. It had posted a net profit of Rs 59.40 crore in the July-September period of last fiscal.