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Our Infrastructure Bureau
Mumbai, July 28: The Lalbhai group company Atul will buy out Swiss multinational Ciba's 35 per cent equity holding in Cibatul. The move will end a 38-year-old relationship between the two joint-venture partners in the country.
Incorporated in 1960, Cibatul manufactured epoxy resins, UF resins and certain pharmaceutical intermediates. The split, which was widely expected, will see Atul group acquire Ciba's stake (roughly 21 lakh shares) at a price of Rs 26 per share, translating into an outgo of Rs 5.46 crore.
All the relevant approvals from the Reserve Bank of India and the Income Tax Department have been received and severance agreements are likely to be signed and implemented next month.
Atul managing director Sunil Lalbhai said that a decision to "part company" was taken a couple of years ago. "The sign on and the implementation of the severance agreement are simply a formalisation of this decision," he said. Officials of Ciba Specialty Chemicals India, however, did not wish to comment on the Mumbai, July 28: The Lalbhai group company Atul will buy out Swiss multinational Ciba's 35 per cent equity holding in Cibatul. The move will end a 38-year-old relationship between the two joint-venture partners in the country.
Incorporated in 1960, Cibatul manufactured epoxy resins, UF resins and certain pharmaceutical intermediates. The split, which was widely expected, will see Atul group acquire Ciba's stake (roughly 21 lakh shares) at a price of Rs 26 per share, translating into an outgo of Rs 5.46 crore.
All the relevant approvals from the Reserve Bank of India and the Income Tax Department have been received and severance agreements are likely to be signed and implemented next month.
Atul managing director Sunil Lalbhai said that a decision to "part company" was taken a couple of years ago. "The sign on and the implementation of the severance agreement are simply a formalisation of this decision," he said. Officials of Ciba Specialty Chemicals India, however, did not wish to comment on theissue.
The Atul group, however, continues to hold approximately 9.4 per cent equity stake in Ciba Specialty though it has made significant divestments in Novartis India over the recent past.
The severance deal will see Cibatul change its name, even while letting go of the Ciba prefix, though no details on the new name could be ascertained. Significantly, the valuation exercise has taken into account this aspect while arriving at the price of Rs 26 per share, agreed to by both the partners.
The rift between Ciba and Atul, apparently, began in the mid-'90s when the centre reduced import duties on epoxy resins. Atul had alleged that Ciba decided to import epoxy resins and advised Cibatul to stop its manufacture without agreeing to source alternate products. This, Atul claims, forced it to launch its own epoxy brand, Lapox. Cibatul manufactures its products at Atul, a self contained township, approximately 400 km away from Mumbai.
The Swiss multinational, on the other hand, had claimed that it was forcedto enter into a joint venture with the Chennai-based Tamil Nadu Petroproducts (TNPL) for epoxy resins when Atul launched Lapox in direct competition with Ciba's brand Araldite. The ensuing difference in priorities had, hence, resulted in both partners deciding to separate. At present, Araldite is understood to be the market leader in its segment, while Lapox controls close to 40 per cent of the domestic market.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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