Chennai: The Rs526 crore turnover Carborundum Universal Ltd (CUMI), has signed a binding MoU with consortium of investors to acquire 84.14 per cent stakes in Volzhsky Abrasives Works, Russia. CUMI is part of the $2 billion Chennai-headquartered Murugappa Group.
The MoU will be firmed up with a share purchase agreement once CUMI completes the physical due diligence and the deal is approved by Russian Federal Antimonopoly Service. They expect to complete both by this July.
Officially undisclosed, the acquisition price is expected to be less than Volzhsky Abrasives' turnover of $54 million.
CUMI will fund the acquisition through a mix of debt and internal accruals while the actual structuring is yet to be freezed. "Volzhsky Abrasives actually mirrors CUMI's current operations and is a good fit for us," said chairman MM Murugappan.
The Russian company is the largest producer of silicon carbide abrasives there with 65,000 tonne per annum (tpa) capacity. It also manufactures bonded abrasives (capacity 35,000 tpa) and specialised refractories (1500 tpa).
It is Volzhsky Abrasives' export centric silicon carbide business that attracted CUMI. The Russian company's production capacity is ten times that of CUMI's in India. Further CUMI with operations in Australia, Canada, China, Middle East, US and India could meet the global demand for silicon carbide abrasives from Russia and also get into value added micro abrasives.