Rossari Biotech Limited, a Speciality Chemicals manufacturer providing intelligent and sustainable solutions for customers across industries, announced that its Board has approved 100% acquisition of Unitop Chemicals Private Limited for Rs. 421 crore. 

As per the agreement and subject to customary closing conditions, Rossari will be acquiring 100% of the equity capital of Unitop Chemicals in two steps. 65% of the equity share capital will be acquired upon closure of the transaction and the balance 35% over the next two years. Rossari plans to fund the investment through cash on its balance sheet and doesn’t intend to raise any debt for this acquisition. 

If we see the revenue mix of Unitop Chemicals, 70% of its revenue (i.e. Rs. 210 crore) comes from agrochemical and oil & gas where Rossari Biotech does not have any focus. The company has healthy international presence as 30% of its revenue (i.e. Rs. 90 crore) comes from exports. This will help Rossari Biotech to expand its operations in these verticals thereby providing incremental value to its shareholders. 

Rossari Biotech and Unitop Chemicals Comparison

Rossari Biotech

Total Capacity - 252,000 MTPA

Focus - Home Personal Care and Performance Chemicals (HPPC); Textile Specialty Chemicals (TSC); and Animal Health and Nutrition (AHN)

Revenue Mix - HPPC (49.7%); TSC (40.3%); and AHN (10%)* 

Unitop Chemicals

Total Capacity - 86,000 MTPA

Focus - Agrochemical; Oil & Gas; and Textile, Pigments, Leather, Paper & Pulp and others

Revenue Mix - Agrochemical (60%); Oil & Gas (10%); and Textile, Pigments, Leather, Paper & Pulp and others (30%)

* Based on Q4 FY21

Source: Indian Chemical News 

Financial Parameters Comparison

Rossari Biotech

FY21 Revenue - Rs. 709.3 Cr

EBITDA - Rs. 123 Cr

Unitop Chemicals

FY21 Revenue - Rs. 300 Cr

EBITDA - Rs. 40 Cr

Source: Indian Chemical News 

The acquisition brings synergies and complementary dimensions to Rossari Biotech such as expanded product portfolio, presence in adjoining areas of speciality chemical segments, pooling together of related technologies, larger international exposure, better domestic market reach, well experienced and competent talent pool and increased end-user industry applications. 

The combination of Unitop Chemicals with Rossari will augment the quality and acceleration of the company’s growth going forward. 

Incorporated in 1980, Unitop Chemicals is a leading supplier of Surfactants, Emulsifiers and Specialty chemicals to a diversified customer base including large domestic and international companies. The company has three manufacturing sites - Dahej, Patalganga and Udhampur with a total capacity of around 86,000 MTPA and its key facility in Dahej is at a close proximity to Rossari’s existing facility. The company's solutions are sold across 25+ countries with exports accounting for 30% of revenues in FY2020. 

In FY2020, Unitop Chemicals’ revenues stood at Rs. 280 crore, with adjusted EBITDA at Rs. 43 crore. In FY2021 unaudited estimated revenues stood at over Rs. 300 crore and the company has a healthy balance sheet with zero net debt. 

Commenting on the acquisition, Edward Menezes, Promoter & Executive Chairman and Sunil Chari, Promoter & Managing Director said, “We are delighted to accelerate the growth momentum at Rossari. Unitop Chemicals is a natural fit with our operations and brings with it immense synergies and complementary growth dimensions." 

"The acquisition and investment of capital to enable this initiative meet the parameters of operational and financial discipline outlined by our Board. We are excited to drive faster growth with larger revenues, greater technological capabilities, stronger spread of market presence, well-aligned operating segments, and most importantly, a more experienced talent pool with augmented capabilities,” added Menezes and Chari. 

Both in agribusiness as well as oil & gas segment there is a long gestation period of 1-3 years for formulation approval so Rossari Biotech will have to focus on increasing its R&D budget for increasing the number of formulations in both the segments so that the company can reap the benefits in the long run. 

Axcelus Finserv Private Limited was the sole advisor to Rossari for the transaction whereas Wodehouse Capital Advisors, a world M&A alliance company is a leading mid-market focused investment bank, was the exclusive financial advisor to Unitop Chemicals.