Nirma to raise up to Rs 7,000 crore for acquisition, expansion of existing plants

In April, the Nirma group acquired eye drops and contact lens maker Sterikon Pharma for around Rs 350 crore.

Soap and detergent maker Nirma is exploring options to raise up to Rs 7,000 crore for acquisition and expansion of its existing plants. The unlisted company posted a revenue of Rs 11,403 crore in the fiscal year ended March 31, 2023 (FY23), a report has said.

Glenmark Life Sciences is on the list of shortlisted companies for financial bids. Nirma has indicated that it will make large acquisitions in the domestic or overseas market to the tune of Rs 5,000-7,000 crore as part of its diversification plan, the Business Standard reported on July 28, citing investment banking sources.

Moneycontrol couldn't verify the report independently.

Plan B

If the acquisition deals don’t materialise, the company will rapidly expand its existing business and plan capital expenditure of an equal amount, the report mentioned. The company has, however, not disclosed its target for the acquisition.

As Indian banks are not allowed to finance acquisitions, the company may raise funds from the private credit market currently dominated by global private equity companies.

News agency Bloomberg earlier this month reported that apart from Nirma, Sekhmet Pharmaventures was among the shortlisted bidders for a controlling stake in Glenmark Life Sciences.

The Mumbai- headquartered Glenmark Pharmaceuticals holds a 83-percent stake in Glenmark Life Sciences and is offloading it to lower its net debt of Rs 2,904 crore as of March this year.

The financials

Citing an anonymous source, the financial daily said Nirma posted a profit of Rs 909 crore in fiscal 2023 and is likely to generate annual cash accruals of more than Rs 1,700 crore as against debt repayment of Rs 650-750 crore in fiscal 2024.

“They want to make an aggressive bid for Glenmark Life Sciences as they are targeting healthcare as the next big focus area,” a banker told the daily.

In April, the Nirma group acquired eye drops and contact lens maker Sterikon Pharma for around Rs 350 crore.

The acquisition of Glenmark Life Sciences will give a boost to the group's ambition to enter in the healthcare sector. The group is already selling all medical devices under Nirlife Healthcare.