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EICL in talks with Riddhi Siddhi to sell starch-making business

India Notes 2018-11-09 09:16:15

Subrata Jana/Mint

Mumbai: Karan Thapar-owned English Indian Clays Ltd (EICL) is in talks with Ahmedabad-based Riddhi Siddhi Gluco Biols Ltd, an agriculture and metal commodities trading company, to divest its industrial starch manufacturing business.

Two people close to the development said on the condition of anonymity that discussions are in advanced stages and an announcement will be made soon.

The transaction, once closed, will mark Riddhi Siddhi’s re-entry into the starch business, which it had exited in 2012. The company had sold its production facilities to Roquette Freres, a French company, at a valuation of ₹985 crore. 

Riddhi Siddhi, which had started the starch business in the early 1990s, had a 25% share of the Indian market when it decided to sell it. In 2006, Roquette had formed a joint venture with the company after acquiring a 15% stake in the Indian firm. Promoted by Ganpatraj Chowdhary, Riddhi Siddhi decided to diversify into wind energy in 2010. A listed company, its major businesses include trading of agriculture and metal commodities and generation of wind power.

Queries emailed to EICL and Riddhi Siddhi remained unanswered press time. 

“Given the growth potential of industrial starch and its increasing demand in various industries such as pharmaceuticals, paper and cosmetics, it is an attractive business to be in,” said the first person. 

According a report, “Native Starch Market in India: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2018-2023”, the production of starch in India reached 4 million tonnes in 2017, growing at a CAGR of around 11% between 2010 and 2017. The market was expected to breach 7 million tonnes by 2023,” the report added. Maharashtra represents the largest market for native starch among Indian states.

“The sale of business by EICL will help in debt reduction to some extent. Riddhi Siddhi is offering a sweet deal as well,” the second person said, adding that given the firm’s emphasis on clay and clay-derived products, it makes sense for EICL to focus on the core business. According to the company website, EICL’s products are exported to over 50 countries globally. Mint, however, could not verify the valuation details. 

EICL has three clay mines in Kerala at Mel Thonnakkal, Veilur and Karemood spread across 42 hectares. It also has two clay processing plants in Veli and Thonnakkal, besides another pilot plant in Veli. The firm deals in developing Kaolin clay-based hydrous and calcined solutions. EICL provides clay-based product solutions to various industries including paper, paints, rubber, plastics, ceramics, adhesives, dyes, cable insulations and soaps, and insecticides.

According to filings with the Registrar of Companies, Bengaluru-headquartered EICL posted operating profit of ₹64.84 crore in 2017-18, compared to ₹65.97 crore a year-ago.

Founded in 1920 by Karam Chand Thapar, the Thapar group during its six decades of existence had diversified business interests across paper and chemicals, textiles, banking, engineering, mining, consumer durables, food processing, footwear manufacturing and edible oils among others. 

The starch business was started in 1937, and was merged with English Indian Clays Ltd in 2001. Thapar had promoted the company as Indian Starch and Chemicals Ltd, which later came to be known as Bharat Starch Industries Ltd. The agro-based company had its first production facility at Yamunanagar in Haryana, and was the first company in the organised sector to enter into starch manufacturing in India.

The group companies included The Pioneer, Oriental Bank of Commerce, Oriental Insurance, EICL, Crompton Greaves Ltd, Greaves Cotton Ltd, Global Green, JCT Group, BILT, BILT Chemicals, and KCT Bros., among others. Karan Thapar, the grandson of Karam Chand, owns EICL Ltd, Greaves Cotton Ltd and Premium Transmissions Ltd.

First Published: Fri, Nov 09 2018. 09 16 AM IST