SRF sells engineering plastics business to DSM

SRF Limited has announced that it has entered into a definitive agreement to sell its engineering plastics business to DSM, which is the life sciences and materials sciences company. SRF is a chemical-based multi-business company engaged in the manufacturing of industrial and speciality intermediates.

The consideration decided for this transaction is Rs 320 crore to be paid in cash. SRF’s engineering plastics business manufactures multiple grades of engineering plastic compounds catering to the automotive and electrical industries.

As per company’s management, its engineering plastics business has been profitable and niche business, but scaling it into a large business would take significant time and hence the company decided to pass it on to a credible player.

This transaction would enable SRF to achieve three critical goals for the company and its shareholders. The transaction would provide cash and liquidity, which would further strengthen its balance sheet. It will allow to optimise and focus on developing more complex technologies within the chemicals business space. Also, it will add value to its engineering plastics business, giving the employees an opportunity to work in DSM, which has expertise in engineering plastics space.

On Tuesday, the stock of SRF opened at Rs 2,474. During the morning trading session, it went up by 2.4 per cent to Rs 2,523 from its previous close of Rs 2,465.