Sime Darby eyes a strategic stake in Gokul Refoils

Twenty five years after it sold stake in Shaw Wallace to Manu Chhabria’s Jumbo group, Malaysian conglomerate Sime Darby Berhad is planning to purchase a strategic stake in an Indian company.

Sime Darby, the world’s biggest listed palm oil producer, is in talks with the promoters of Gokul Refoils & Solvent to buy up to 15 per cent stake in the Ahmedabad-based edible oil maker, two persons with direct knowledge of the negotiations said, on condition of anonymity.

“The promoters are willing to sell the stake at Rs 150 per share,” one of the persons said. At that price, Sime Darby will have to pay Rs 300 crore to buy a 15 per cent stake in Gokul Refoils, valuing the company at nearly Rs 2,000 crore.

Shares of Gokul Refoils closed at Rs 102.40 on the Bombay Stock Exchange (BSE) on Thursday.

When contacted, Praveen Khandelwal, vice president of corporate strategy at Gokul Refoils & Solvent, said, “These are just market rumours. We will not be able to comment anything on it.”

An e-mail query sent to the group communications and corporate affairs department of Sime Darby on the company’s plan to buy stake in Gokul Refoils remained unanswered.

The promoters of Gokul Refoils – the Rajput and Thakkar families, owned 69.76 per cent stake in the company, as of September 30. Out of this, 16.30 per cent stake was pledged.

If the deal with Gokul Refoils materializes, it will be the first major investment of Sime Darby, which accounts for 6 per cent of total global annual crude palm oil output, in an Indian firm since its exit from Shaw Wallace in January 1985. The company’s other businesses include real estate, distribution of heavy equipments and automobiles and healthcare among others.

Bursa Malaysia-listed Sime Darby’s cash and bank balance for the financial year ended June 30 was $1.46 billion, as per its annual report.

Gokul Refoils intends to use the proceeds from the stake sale for its capital expansion plans, one of the persons quoted earlier said. The company is planning to invest Rs 350 crore for new refineries in Maharashtra and southern India.

At present, Gokul Refoils has three production plants in Gujarat and one in West Bengal. In the edible oil category, its two major brands are Gokul and Zaika. For the quarter end September 30, the company’s net profit increased 109 per cent to Rs 20.22 crore from Rs 9.68 crore in the year-ago period.