Update: Schoeller acquisition to be EPS accretive: Spentex chief

02 July 2007

The Schoeller Litvinov acquisition will be EPS accretive, says Mukund Choudhary, MD, Spentex Industries.

Choudhary added that the deal is to be finalised in Q2 and the acquisition will be completed by 18July.

Excerpts from CNBC-TV18''s exclusive interview with Mukund Choudhary:

What do you stand to gain out of this acquisition? What are the synergies emerging out of it?
The enterprise value that we are paying for this company is €25 million and apart from that, we are actually getting net current assets of €9 million along with the company, for which we are not making any payments. So our effective pay out is only about €16 million. Last year, this company did EBITDA of about €6 million, so we have got it at a good valuation.

Now, this company is amongst the top yarn manufacturers in Europe and has a kind of a ''made-in-Europe'' strategy and a label and has a very good brand name on its quality products in Europe.

The main reason is that, our products and their products do not conflict. The product range that they produce over there is totally different from the product range that we produce in India or in Uzbekistan. So we do not compete with each other, we gain to take advantage from the products they are making. We''ll learn to make those products and if we are able to integrate the two companies and play on the strengths of both the companies, we will have additional advantages.