Anil Ambani's PE firm picks up 13.7% in Butterfly

The Anil Ambani-led Reliance Alternative Investments Fund, managed by Reliance Equity Advisors, has picked up a 13.7 per cent stake in Butterfly Gandhimathi Appliances Ltd (GAL) for around Rs 100 crore. The Chennai-based company is the owner of Butterfly brand of cookwares.

The PE firm will acquire around 2.4 million shares at a price of Rs 408 a share, including a premium of Rs 398.

Post the fund raising, the promoter group’s shareholding in GAL will come down to 67 per cent from 78 per cent, said VM Seshadri, managing director, Butterfly Gandhimathi Appliances Ltd.

Of the total Rs 100 crore, Rs 30 crore will be used to pay back long-term debt, Rs 40 crore towards capacity expansion and another Rs 30 crore towards margin for the working capital.

Commenting on the expansion plan, he said, at present the company had manufacturing capacity of 900,000 pieces for pressure cookers, which will be increased to 2.5-3 million by 2014. Similarly, new capacity would be added, especially for cookers and non-stick.

During the current fiscal, the company would exceed its sales target of Rs 410 crore to reach around Rs 600 crore, on the back of Tamil Nadu government’s order for mixer- grinder as part of the freebies scheme, he said.

“We expect government orders for the next two years, and our sales target of Rs 1,000 crore is excluding that,” said Seshadri.

The company will also complete its pan-India presence, from the current strongholds of south and west markets  in the country. “We are expecting 10-12 per cent of the Rs 1,000 crore turnover in 2014-15 to come from the National Capital Region (NCR),” he said.

It is also exploring countries in Europe and the US, while planning to expand its base in West Asia. “We will do a feasibility study in the US and Europe and then come out with a detailed business plan,” said Seshadri.

GAL, in 1998, took up financial restructuring with the Board for Industrial and Financial Reconstruction (BIFR), and the company is in the process of reviving the business from the past few years.

The company also had a division for manufacture of non-stick cookwares, which has been suspended for some years due to financial constraints, according to its annual report 2010-11.