Fgp To Sell Fibre Glass Unit

FGP Ltd, an RPG group affiliate has decided to sell its fibre glass reinforcement business to Saint Gobain, the French multinational which has been aggressively moving into India.

In an announcement yesterday, FGP said it has signed a Memorandum of Understanding (MoU) with Vetrotex International, a 100 per cent subsidiary of Saint Gobain.

"A final agreement will be subject to a due diligence by Vetrotex and the necessary approvals of the Government of India, finanacial institutions and the shareholders of FGP," FGP president K V Gopalakrishnan has stated in a signed statement.

"The board of FGP felt that it would be in the company's best interests if a leading global player having the necessary technology and access to world markets could be brought in to takeover FGP's fibre glass reinforcements business," said the statement.

 

The decision to sell has been prompted by the changed conditions in the post-liberalisation era. A number of global players have evinced keen interest in setting up projects in India with a few having already announced plans to set up manufacturing facilities.

The fibre glass industry worldwide is extremely capital and technology intensive.The FGP board decided in this context to sell the business to a global major which has the necessary expertise and access to world markets.

Compagnie de Saint Gobain is among the world's 100 largest industrial companies with operations in more than 40 countries. It manufactures and distributes products based on materials like glass, ceramics, fibres and metals for packaging, building materials and industrial applications.

The $18 billion Saint Gobain employs more than a lakh people around the world. In India, it holds a majority stake in Grindwell Norton and Maharashtra Glass and Agro.

It is also currently setting up a 600 tpd greenfield float glass project in Chennai.Saint Gobain, which has been shoring up its position in India recently hiked its stake in Maharashtra Glass and Atul Glass to 51 per cent from 26 per cent.

The hike was achieved by way of preferential offers. FGP also decided to shut down its Thane unit near Mumbai late last year. It put through a voluntary retirement scheme at its Thane plant.

The plant had been shut down for at least six months before the actual closure. The outgo on the VRS to FGP was about Rs 12 crore.

FGP was formerly an associate of Pilkington of UK, another leading fibre glass producer. Pilkington was eventually taken over by Saint Gobain worldwide. The talks between FGP and Saint Gobain started some years back but got bogged down due to differences over value.